The relationship between service quality, customer satisfaction and customer loyalty: A study in telecommunication industry of laos

strongest impact on customer loyalty. Interestingly, factor F3 had level of statistical significance at 0.161 above 0.05 that means this factor was not significant in the model or in other word there was no clear impact of this factor on the customer loyalty. 117 In addition, together with testing the impact of service quality on customer loyalty, I also included demographic variables in the regression model. Those demographic variables play as control variables that help to compare the loyalty levels among different groups of customer. Similar to regression analysis in section 5.4, I chose four demographic variables, including gender, package, monthly expenses of telecommunication, and length of use. The demographic variables are described through Dummy variables in Table 29. Employing the Stepwise method, the regression result is presented in Table 37, 38, 39. Table 37. Model Summary R Adjusted R Std. Error of Model R Square Square the Estimate 1 .586 a .344 .342 .61012 2 .650 b .422 .418 .57349 3 .660 c .435 .429 .56817 a. Predictors: (Constant), F1 b. Predictors: (Constant), F1, F2 c. Predictors: (Constant), F1, F2, q16c Table 38. ANOVA a Sum of Mean Model df F Sig. Squares Square Regression 55.592 1 55.592 149.345 .000 b 1 Residual 106.089 285 .372 Total 161.681 286 Regression 68.276 2 34.138 103.798 .000 c 2 Residual 93.405 284 .329 Total 161.681 286 Regression 70.323 3 23.441 72.612 .000 d 3 Residual 91.359 283 .323 Total 161.681 286 a. Dependent Variable: Y b. Predictors: (Constant), F1 c. Predictors: (Constant), F1, F2 d. Predictors: (Constant), F1, F2, q16c 118 Table 39.Coefficients a Unstandardized Standardized Collinearity Model Coefficients Coefficients t Sig. Statistics B Std. Error Beta Tolerance VIF (Constant) 1.191 .165 7.226 .000 1 F1 .651 .053 .586 12.221 .000 1.000 1.000 (Constant) .807 .167 4.837 .000 2 F1 .427 .062 .385 6.918 .000 .658 1.519 F2 .362 .058 .345 6.210 .000 .658 1.519 (Constant) .871 .167 5.206 .000 F1 .407 .062 .366 6.591 .000 .647 1.546 3 F2 .347 .058 .331 5.977 .000 .651 1.535 q16c .223 .089 .116 2.518 .012 .937 1.067 a. Dependent Variable: Y The regression result with probability of F to enter ≤ 0.05, probability of F to remove ≥ 0.1 having three different regression models. Among them, the model 3 has the biggest R 2 = 0.435. This means that the model 3 best describes the relationship between the dependent variable and independent variables. In addition, in ANOVA analysis, model 3 has P_value = 0.00 ≤ 0.05. Thus, model 4 best suits to describe the relationship between customer loyalty and its independent variables. The regression model is: = . + . + . + . In the above model, all regression coefficients are different to 0 with P_value ≤ 0.05. The result shows that among demographic variables, there is only variable Q16c: “monthly expenses” is significant. This means that there are differences in customer satisfaction between different groups of customer categorized by “monthly expenses”. The regression coefficient of Q16c is 0.223which means that customers havingmonthly expenses for telecommunication 20-50 USD/month more satisfy than other groups of customers. Interestingly, this difference is quite strong. 119 The regression result also reveals that there are not differences in customer satisfaction among groups of customer categorized by other demographic variables. 5.6. The relationship between customer satisfaction and customer loyalty The regression model of the relationship between customer satisfaction and customer loyalty was proposed as below: = + Where: Y = customer loyalty to their service provider Q21 = customer satisfaction with telecommunication services The regression result is presented in Table 28, 29. Table 40. Model Summary b R Adjusted R Std. Error of Durbin- Model R Square Square the Estimate Watson 1 .577 a .333 .330 .61524 1.296 a. Predictors: (Constant), q21 b. Dependent Variable: Y2 Table 41. ANOVA a Sum of Mean Model df F Sig. Squares Square Regression 53.802 1 53.802 142.135 .000 b 1 Residual 107.880 285 .379 Total 161.681 286 a. Dependent Variable: Y b. Predictors: (Constant), q21 It can be seen from the Table 31 that R Square = 0.333 which means the regression model explained 33.3% the variance of customer loyalty influenced by customer satisfaction. The result of the appropriateness analysis of the regression 120 model (ANOVA analysis) revealed that P-value was below the significant level 0.05 which support this model is appropriate to describe the relationship. Table 42. Coefficients a Unstandardized Standardized Model Coefficients Coefficients t Sig. B Std. Error Beta (Constant) 1.114 .175 6.361 .000 1 Q21 .681 .057 .577 11.922 .000 a. Dependent Variable: Y2 The regression equation is then formed as below: = . + . Testing the significance of the regression coefficients showed that customer satisfaction had level of statistical significance below 0.05 that means this factor was significant in the model. The Unstandardized Coefficients had positive values supporting a positive impact of customer satisfaction on customer loyalty which means the hypothesis H3 has been confirmed. 121 CHAPTER 6. DISCUSSION, CONCLUSION AND RECOMMENDATION. 6.1. Discussion 6.1.1. Service quality scale It is interesting to see that telecommunication service quality in Laos can be measured by three constructs, including (1) customer services and pricing structure; (2) network and billing system; (3) value-added services (see table 20 for details). This scale’s components are very different compared to the original SERVQUAL scale which consists of five dimensions. This finding can be accepted because as suggested by Parasuraman, Zeithaml, & Berry (1988), the SERVQUAL scale is a basic skeleton that, when necessary, can be adapted or supplemented to fit the characteristics or specific need of research need of particular research setting. The differences between telecommunication service quality scale in Laos and the original SERVQUAL scale also support the findings in previous telecommunication service researches in others research settings. For example, Wal et al's(2002) study in South Africant market show that customers tend to view “responsiveness’, “assurance”, and “empathy” as one dimension. Another research conducted in Thailand by Johnson & Anuchit Sirikit (2002) shows that although the structure of the service scale in Thai telecommunication setting is not entirely consistent with the SERVQUAL dimensions but SERVQUAL based scale is appropriate for the telecommunication service field. Comparing with other researches’ findings, such as in Aydin & Gökhan Özer (2005; Santouridis & Trivellas (2010); D. C. Kim et al., (2006); Lee et al., (2001);Lim et al., (2006);Srivastava & Rai, (2013); and Choi et al. (2007) I see that there is no consensus onthe telecommunication service quality scale, but they all base on the SERVQUAL scale to develop an appropriate scale for each context. 122 Thus the scale developed in this research is worth considering for service quality measurement in the Laos telecommunication industry. 6.1.2. Relationship between service quality, customer satisfaction and customer loyalty The regression procedures show that all dimensions of service quality have a positive and significant relationship with customer satisfaction and customer loyalty; customer satisfaction has a positive and significant relationship with customer loyalty. Those results affirm the important role of service quality in the Laos telecommunication industry. The results also largely agree with relevant research found in literature that there is a wealth of evidence in literature for the positive relationship between customer satisfaction and loyalty (Aydin and Ozer, 2005; Gerpott et al., 2001; Kim et al., 2004; Lee et al., 2001). 6.2. Conclusion The results of the survey indicate that telecommunication users in Laos just slightly satisfy with their current service providers that means these providers should do more to increase their customer satisfaction. This situation is also true to customer loyalty with the average item score was 3.16. Scoring at the ordinary levelof customer loyalty implies that telecommunication subscribersare easy to change their providers when they have been offered a better plan from competitors. The research findings reveal thattelecommunications service quality in Laos context is measured by three dimensions, including“customer services and pricing structure”, “network and billing system” and “value-added services”. These dimensions all positively influence on customer satisfaction. Among them, factor “customer services and pricing structure” has strongest positive impact on customer satisfaction. However the telecommunications service quality in Laos was at ordinarylevel that was the reason for low level of customer satisfaction. 123 Both service quality and customer satisfaction have positive relationship with customer loyalty. This means that improving service quality can advance customer satisfaction then gain customer loyalty. 6.3. Recommendation Laos telecommunication providers could measure their service quality through three dimensions with fourteen indicators: “customer services and pricing structure” comprising of six indicators, “network and billing system” containing five indicators and “value-added services” consisting of three indicators. The higher the score of each indicator and also each dimension the higher the service quality is. Drawing from the survey result, Laos telecommunications service quality is weak at indicators relating to network and billing system. To improve network and billing system, Laos telecommunication service providers should improve their network coverage both in domestic Laos and international. To do that, providers should invest more on their infrastructure and look for collaborations with others to exploit and share infrastructure. They also have to issue accurate and detailed bills that help customers less confuse when paying. If customers want to claim for their bills, they can do this conveniently, for example, through call centers, the call center team should quickly address customers’ requests without any confusions. In order to improve customer satisfaction and customer loyalty, telecommunication service providers should focus on dimension “customer services and pricing structure” of service quality because it has the strongest positive impact on satisfaction as well as customer loyalty. For example, providers should have courteous and enthusiastic representative teams who have good communication skills and firm knowledge of provided telecommunication services. Theyare also given power to address some popular customers’requests directly. Customer loyalty is the primary aim of business management performances. In the telecommunication industry, customer loyalty is influenced by both customer 124 satisfaction and service quality. Herein, the key solution is by improving service quality, especially focus on “customer services and pricing structure” dimension. 6.4. Limitation of the study and suggestion for future research 6.4.1. Limitation The quota and convenience sampling methods are non-random, and may introduce sampling bias, threatening external validity. The results obtained by the quota and a convenience sampling method were difficult to generalize to the population because a quota and convenience sampling method was a type of non- probability sampling and the characteristics of data-producing samples partially matched those of quota samples. The findings of this study cannot be generalized to other categories of services due to the difference in the nature of each industry. The survey invitation may not have reached a representative sample of the whole target population because it just was conducted in Vientiane due to the constraints of cost and time. The study did not examine the relationships among socio-demographic characteristics, service quality, customer satisfaction, and customer loyalty. 6.4.2. Suggestion for future research This study was limited to examining the causal relationships among service quality, customer satisfaction, and customer loyalty. In any future study, other significant variables, such as customer expectations, electronic service quality, perceived value, customer complaint, and electronic recovery service quality, may be added into the hypothesized causal structural model. Future studies may test whether electronic recovery service quality is a dimension of electronic service quality and whether it indirectly affects customer satisfaction through electronic service quality for consumer electronics e-tailers. 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(months) ☐1 Less than 6 ☐2 6-12 ☐3 12-24 ☐4 more than 24 DIRECTIONS: The following set of statements relate to your feelings about telecommunication company which you are consuming there services. For each statement, please show the extent to which you believe this has the feature described by the statement. Circling a "1" means that you strongly disagree that they have that feature, and circling a ''5'' means that you strongly agree. You may circle any of the numbers in the middle that show how strong your feelings are. There are no right or wrong answers-all we are interested in is a number that best shows your perceptions about this providers. 145 Part 2. Satisfaction and loyalty Strongly Strongly disagree agree 1. I overall satisfy with the services ☐1 ☐2 ☐3 ☐4 ☐5 2. I will go on using this provider ☐1 ☐2 ☐3 ☐4 ☐5 3. If I bought a new service, I would prefer this ☐ ☐ ☐ ☐ ☐ provider 1 2 3 4 5 4. I recommend this provider to people ☐1 ☐2 ☐3 ☐4 ☐5 5. I encourage friends and relatives who plan ☐ ☐ ☐ ☐ ☐ to buy a telecom service 1 2 3 4 5 6. Even if the other providers’biling was ☐ ☐ ☐ ☐ ☐ cheaper, I would go on using this service 1 2 3 4 5 146 Part 3. Service quality Strongly Strongly disagree agree Network 1. This provider has clear call quality ☐1 ☐2 ☐3 ☐4 ☐5 2. I can use the services in every corners of the ☐ ☐ ☐ ☐ ☐ country and also abroad 1 2 3 4 5 Value-added services 3. The provider has variety of value-added ☐ ☐ ☐ ☐ ☐ services 1 2 3 4 5 4. It is convenient of use of value-added ☐ ☐ ☐ ☐ ☐ services 1 2 3 4 5 5. Provider’s value-added services are up-to- ☐ ☐ ☐ ☐ ☐ date 1 2 3 4 5 Customer service 6. Well perform in fixing a problem ☐1 ☐2 ☐3 ☐4 ☐5 7. Customer service representatives are ☐ ☐ ☐ ☐ ☐ courteous 1 2 3 4 5 8. Having consistent advice/instructions from a ☐ ☐ ☐ ☐ ☐ call center 1 2 3 4 5 9. Accurate representation of service and terms ☐1 ☐2 ☐3 ☐4 ☐5 Pricing structure 10. The services provided are reasonability of ☐ ☐ ☐ ☐ ☐ price 1 2 3 4 5 11. Having a variety of price schedule ☐1 ☐2 ☐3 ☐4 ☐5 12. It is convenient and free in choosing price ☐ ☐ ☐ ☐ ☐ schedules 1 2 3 4 5 Billing system 13. Provision of accurate billing ☐1 ☐2 ☐3 ☐4 ☐5 14. Ease of understanding and resolving billing ☐ ☐ ☐ ☐ ☐ issues 1 2 3 4 5 15. Resolving billing issues quickly ☐1 ☐2 ☐3 ☐4 ☐5