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Exploring the relationship between customer satisfaction and loyalty in the mobile telecommunication industry in Ghana.

Abstract

The literature on customer satisfaction and loyalty provides us with a debate as to the relationship that exists between customer satisfaction and loyalty. Whereas some argue that there is a direct link between satisfaction and loyalty, others have a different view.

The main objective of the research was therefore to explore the relationship between customer satisfaction and loyalty in the mobile telecommunication industry. In other words, the study sought to verify if customer satisfaction leads to customer loyalty in the mobile telecommunication industry in Ghana.

The main method used for the collection of data was survey questionnaire to two hundred respondents who happened to be subscribers in the mobile telecom industry.

It was realised among other things that a lot of the customers at certain points in time have been dissatisfied with their mobile telecom service providers. It was also realised that there was no direct link between customer satisfaction and loyalty. Most of the customers who said they were satisfied were ready to switch to another company should that company offer superior service.

Keywords: Customer, Satisfaction, Dissatisfaction, Loyalty, Performance, Expectation, Service, Telecommunication, Mobile

I. INTRODUCTION

The importance of customers has been highlighted by many researchers and academician. Bamfo (2009) quoted Clegg (2000) as saying; however good products, however strong the brand, customer satisfaction is the only way to have a competitive edge and to keep customers coming back all the time. (Bamfo 2009) again mentions that customers are aware of what constitute satisfaction and therefore organisations cannot take them for granted. Patterson and Spreng (1997), cited by Payne and Holt (2001) indicated that the creation of value and more specifically customer value, is increasingly seen as the next source of competitive advantage. Peter Drucker added his voice to the importance of customers by making mention that the aim of marketing is to identify and understand customers so well that the product on offer fits them well and sells itself. Drucker believed that even though businesses are to make profit; profit making is a necessity and not a purpose. It is in fact, the end result, a desirable outcome, of creating a satisfied customer. (Kotler, Armstrong, Suanders, and Wong, 2002).

This view is supported by Theodore Levitt, who explains this by an analogy with human beings-all humans needs to eat for survival, but eating is not a purpose. Furthermore, making money does not provide a legitimate reason for society to support the money making firm. Society supports an enterprise because the satisfaction of its customers is their primary concern. In other words, the satisfaction of customers takes precedence over profit making.

In response to these sentiments expressed by the management experts, many companies are drifting towards a customer culture-a culture that incorporates customer satisfaction as an integral part of the corporate mission and utilizes an understanding of customer behaviour as inputs to all of its marketing plans and decisions. Related to this is the concept of internal marketing--marketing by a firm that trains and effectively motivates its employees to work as a team to provide customer satisfaction. It must, however, be emphasized that some companies are just paying lip service to this concept. In other words, some companies use this concept more in words than in deeds.

For businesses to be able to serve the needs of their customers better, they need to be democratic. This is where the business is governed by and for customers and serves both the public and private interests. 'Paying attention to customer behaviour and fashioning a business to respond to customer needs, desires and preferences amount to business democracy for a nation's citizens.' (Sheth, Mittal and Newman, 1999).

The importance of customers has led to the new paradigm shift from product, production and selling philosophies to the marketing philosophy which is more customer oriented. Thus, Jobber (2007) indicated that customers are at the centre of marketing philosophy and effort and that the task of marketers is to satisfy the needs and expectations of customers better than competitors.

II. RESEARCH OBJECTIVES AND QUESTIONS

The main objective of the research was to explore the relationship between customer satisfaction and loyalty in the telecommunication industry in Ghana. Some specific objectives were as follows:

* To identify the criteria customers use in measuring satisfaction

* To identify the satisfaction level of customers

* To find out how loyal customers are to their service providers

* To explore the reasons behind customer loyalty and disloyalty.

* To investigate the reasons behind the use of more than one network at the same time.

The following questions were therefore necessary to enable the researcher achieve the set objectives:

* What do customers expect from their service providers to be satisfied?

* What is the level of customer satisfaction in the mobile telecommunication industry?

* What is the level of customer's loyalty to their service providers?

* Why are some customers loyal and others disloyal in then mobile telecom industry?

* Why do customers use more than one network at the same time?

III. LITERATURE REVIEW

Who is a Customer?

A customer is 'a person or organizational unit that plays a role in the consummation of a transaction with the marketer or an entity'. (Sheth et al., 1999). From this definition, customers of mobile phone companies in Ghana could be individuals, households and organisations. Even as these companies pay more attention to meeting the needs of their individual customers, they need also to make sure that the needs of their corporate customers are met as well.

Mention must also be made of the fact that employees of mobile phone companies also constitute customers of these companies. A satisfied employee leaves no stone unturned to make customers satisfied. Satisfied employees tend to serve their customers better. The way the workforce or employees view the services of the service provider they work for and the satisfaction they derive from it, i.e., job satisfaction, affect their attitude towards their jobs and ultimately affect their dealings with the customer. Mobile phone companies therefore have the task of satisfying their internal as well as external customers.

This notion of not focussing exclusively on external customers is supported by Baker (1999), who makes mention of the fact that, it is a gross mistake on the part of businesses to focus all their attention on 'external dimension of service, that is, customer perception'. He goes on to say that the 'internal dimension' is of equal importance.

Customer Satisfaction

Perreault et al. (2000), view customer satisfaction as 'the extent to which a firm fulfils customers' needs, desires and expectations'. Kotler (2003) also defines satisfaction as 'a person's feeling of pleasure or disappointment resulting from comparing a product's perceived performance (or outcome) in relation to his or her expectations'. Satisfaction is an overall customer attitude towards a service provider, or an emotional reaction to the difference between what the customer anticipate and what they actually receive, as far as the fulfilment of some need, goal and desire is concerned. (Hansemark and Albinsson 2004).

These definitions all point to the fact that every customer has in one way or the other something he/she expects from his/her service providers. These expectations have come into play because of a need that has to be satisfied. These expectations are not the same as there are many customers. Kotler et al (2002), posit that the customer gets dissatisfied if performance is below expectation and vice versa. If performance goes beyond the expectation of the customer, the customer is highly satisfied and delighted.

Motley, (2003), corroborates the idea of matching service performance with customers' expectations. He notes that the mission of a business is the creation of satisfied clients who tend to favour the organization through time by patronising the services being delivered by the business. He goes further to mentions that, businesses can achieve this aim by understanding what satisfies and dissatisfies their customers or clients.

The problem that businesses face is the fact that expectations are difficult to measure and the only way to know whether or not the customer is satisfied is when the service has already been delivered. There is therefore the need for standardisation of service. This will help in the determination of deterioration in service quality and to make room for service quality assessment.

There are a number of factors that affect customer satisfaction. These include among others, friendly employees, courteous employees, knowledgeable employees, helpful employees, accuracy of billing, competitive pricing, and service quality. When all these factors are right, there is no way the customer will not be very satisfied.

Customer Loyalty

A customer is loyal to a particular marketer and/or service provider, when he decides to stay with the marketer and buy its products for a long time irrespective of the price and other non monetary factors. Customer loyalty is the creation of benefits for customers so that they maintain or increase their purchases from that organisation (Anderson and Jacobsen 2000). Oliver (1997) on his part describes customer loyalty as 'a deeply held commitment to re-pay or re-patronise a preferred product or service consistently in the future despite situational influences and marketing efforts having the potential to cause switching behaviours.

Customer Satisfaction and Loyalty: The Relationship

The question which needs to be answered is whether there is any correlation and/or relationship between customer satisfaction and customer loyalty. Kotler (2003) put forward that there is no direct relationship between customer satisfaction and customer loyalty. In other words, the relationship is not proportional. The idea of customer satisfaction not directly linked with customer loyalty is supported by Oechsli and Matt (2000). They hold the view that; the fact that a customer is satisfied with the services of a business does not guarantee his or her loyalty. They therefore see a sharp distinction between customer satisfaction and loyalty. In their own words, 'satisfaction is a fleeting emotional response to the quality of the client's last business transaction'. 'Being satisfied at the moment is no guarantee of an ongoing relationship'. Hokanson (1995) mentions the fact that a very satisfied customer does not necessarily mean a loyal customer.

Winstanley and Martha (1997), have a different view about the relationship between customer satisfaction and loyalty. They perceive a direct relationship between satisfaction and loyalty. They claim that when customers are satisfied, they concentrate their business with one business or service provider. Also customers who are highly satisfied are much more likely to view their service providers as their main relationship business.

Thus, Clarke (2001), has put forward the argument that, 'a business that focuses exclusively on customer satisfaction runs the risk of becoming an undifferentiated brand whose customers believe only that it meets the minimum performance criteria for the category'

IV. RESEARCH METHODOLOGY

The researcher collected data from customers and/or subscribers in the mobile telecommunication industry in Ghana. The area of study was Kumasi Metropolis and a sample size of 200 respondents. The data collected was mainly on satisfaction and loyalty. The reason was the fact that the researcher sought to explore the relationship between customer satisfaction and loyalty. The data was collected in the first quarter of 2009.

The main method which was used in collecting data was structured survey questionnaire. This is because a questionnaire survey is cheaper and less time consuming than in-depth interview. (Collis and Hussey 2003) The analysis of data collected was done with the aid of Statistical Package for the Social Sciences--SPSS.

V. RESEARCH FINDINGS

VI. DISCUSSION

Customer Dissatisfaction and loyalty

The argument put forward by some researchers indicate that some customers could be dissatisfied and still remain loyal. In other words, there is no direct relationship between satisfaction and loyalty (Oechsli and Matt, 2000). Loyalty is about continuing to use the service of a particular service provide; in this case the mobile telecom company, regardless of price, quality of service, attitude of employees among other factors. Table 1 indicates that 165 respondents, representing 91%, said that they had been dissatisfied at some point in time with their service provider. Out of this, 22 respondents indicated that they would continue to use the services of their mobile telecom company should prices go up and should there be poor network quality. 143 respondents, however, would not continue to use the service if prices go up and network quality is relatively poor.

This suggests that there is a strong link between customer dissatisfaction and disloyalty. In other words, disloyal customers must have been dissatisfied with the services of their mobile telecom companies. Some customers, no matter their level of dissatisfaction want to continue to use the services of a particular mobile telecom company. It should, however, be emphasised that these customers are invariably in the minority.

Customer Satisfaction and Loyalty

Related to the above is the discussion of the relationship between satisfaction and loyalty. With regards to satisfaction, it was revealed by table 2 that 118 respondents, representing approximately 65% were satisfied-highly satisfied and satisfied put together. Out of this, 97 respondents said they would change their service providers if prices tend to be the highest and network quality and related services poor. Only 18 respondents would do otherwise.

This is in correlation with the views of Hokanson (1995) who suggests that satisfied customers do not necessarily become loyal. Customer loyalty therefore has very little to do with customer satisfaction. Loyal customer would stay with the service provide even in bad times. Company crisis can affect its ability to provide quality service. Loyal customers, however, would stay with the business until the final demise of the company. Disloyal customers are self centred and therefore, satisfaction is their priority. Any action on the part of the company that purport to negatively influence satisfaction will result in switching from the current provider to another.

Overall, majority of the mobile telecom subscribers are satisfied but that is not a guarantee for loyalty; particularly when competition is intensifying with the influx of other strong players such as Zain and Vodafone.

Customer Dissatisfaction and Loyalty Revisited

Indifferent customers or customers who are not certainty about their satisfaction could be deemed as dissatisfied. This is because it is very easy for such customers to tilt towards dissatisfaction than satisfaction. It therefore stands to reason that, about 33% of the respondents were dissatisfied. Of this, 54 respondents were not ready to be loyal. This is because they were not ready to continue with their service providers if prices tend to be relatively higher and network quality relatively poor. Only 6 respondents were dissatisfied and were ready to stay with their service providers in the face of difficulties on the part of the business.

This reinforces the fact that, there is an inverse relationship between customer dissatisfaction and loyalty. In other words, dissatisfied customers tend not to be loyal to their service providers.

Switching Cost

The previous discussion has indicated that a lot of customers in the mobile telecommunication industry are not satisfied. However, some of these dissatisfied customers are still using the services of the mobile telecommunication companies and are not ready to change their networks. The major reason is that of the fact that customers do not want to incur any switching cost. The main switching cost, as indicated by table 3 is that customers do not want to lose their mobile telephones numbers. This is as a result of the fact that losing one's telephone number or changing it will result in losing contact; particularly with loved ones. One can also lose business contacts and other important contacts.

Other customers, in addition to the above consider the network coverage of the company. A mobile telephone company that has a wider coverage stands the chance of keeping its customers and for that matter creating loyal customers. Customers do not want to get to some part of the country only to find that they are out of coverage area.

Mention must also be made of the fact that some customers may be loyal but may not have any definite or obvious reason for being loyal. The table in question indicates that over 93% of respondents do not have any definite reason for being loyal. This is good for the mobile telecommunication companies because, there is the likelihood that this category of customers will remain loyal for a life time providing the right marketing strategies are put in place.

Reasons for Disloyalty

The fact is that some customers are disloyal just for the fact that they want to try other networks. However, it must be established that majority of mobile telecom customers are not disloyal just for the sake of being disloyal. Many reasons account for disloyalty in the industry in question. Poor network quality, hidden charges and/or high charges, availability of better alternatives service providers are among some of the reasons for disloyalty. Customers want value for their money and therefore will not waste time on service providers which do not meet their expectation. This is indicated by table 4.

Network Combination

Network combination refers to the use of two or more mobile telecommunication services at the same time by individual customers. As indicated by figure 4; 57% as against 43% of respondents are combining networks. This is due to the fact that customers want to avoid incurring switching cost. Some specific reasons why customers want to combine networks include differences in charges, having two phones, making international calls, access to the internet, international usage, enjoying network quality, and taking advantage of promotions.

The charges of the mobile telecom companies in Ghana are not the same. It is cheaper calling people who are on the same network. Since customers want to make cheaper calls and the fact that not all the people you call are on the same network, it is prudent that different networks are used as and when appropriate.

Some customers, for different reason have more than two phones. Others have just one phone but can be connected to two networks. The use of one phone with two sim cards that work concurrently has also contributed to the combination of networks. Customers, therefore, take advantage and get connected to two networks at the same time.

All the mobile networks in Ghana can be used in making international call. However, their charges are different and it also depends on which country one is calling. For this reason, customers want those networks that will give them cheaper rate to the country they call often. Related to the above is the fact that some of the companies have international presence and that makes it easy and possible for customers to use their phone even when they are outside of the country.

VII. CONCLUSION AND RECOMMENDATIONS

It can be concluded by saying, first of all, that satisfied customers are easily turned into loyal customers, but satisfied customers are not necessarily loyal. The company will be able to know its loyalty customers during bad times. Those that are ready to continue to do business with the company even when all is not well on the part of the business organisation could be classified as loyal customers.

Organisations are finding it very difficult if not impossible to create loyal customers because of availability of alternatives services and/or strong competitive environment. Companies in the same industry, and the mobile telecommunication industry for that matter are leaving no stone unturned to woo customers through 'mouth watering' offers and/or promotional packages. The competition in the industry has, therefore empowered the customer the more and they have become more demanding and there it is very difficult to stay loyal.

It could be recommended that the players in the industry should not relent in creating satisfied customers. This is explained by the fact that; though it has been established that there is no direct link between customer satisfaction and loyalty, satisfied customer could easily be turned into loyal customers. They should therefore make their services and/or products their own intrinsic reward. There should be continuous improvements in the provision of mobile telecommunication services.

Related to the above is that, companies in the industry should embark upon aggressive competitive intelligence to learn about the strategies of the other mobile telecom companies. This will help them come out with competitive marketing programmes that will help them maintain their customer and to possibly create loyal customers.

BYLON ABEEKU BAMFO

KNUST School of Business, Kumasi, Ghana

References

Anderson, H. and Jacobsen P. O. (2000), Creating Loyalty: Its Strategic Importance in Your Customer Strategy, Journal of Marketing Management 10, 55.

Baker, M. J. (1991), The Marketing Book: Chartered Institute of Marketing Series III, 2nd Edition, Oxford: Butterworth-Heinemam.

Bamfo, B. A. (2009), Customer Satisfaction in the Banking Industry in Ghana, Indian Journal of Economics and Business, Special Issue, 56-57.

Clarke, K. (2001), What Price on Loyalty When a Brand Switch is Just a Click Away? International Journal, 4. 3.

Collis, J. and Hussey R. (2003), Business Research: A Practical Guide for Undergraduate and Postgraduate Students, Second Edition, New York: Palgrave Macmillan.

Hansemark, O. C., and Albinson, M. (2004), Customer Satisfaction and Retention: The Experience of Individual Employees, Managing Service Quality, 14, 40.

Hokanson, S. (1995), The Deeper You Analyse, The More You Satisfy Customer, Marketing News.

Jobber, D. 2007 (2007), Principles and Practice of Marketing, 5TH Edition, Berkshire: McGraw-Hill.

Kotler, P., Armstrong, G., Saunders, J. and Wong, V. (2002), Principles of Marketing, 3rd European Edition, London: Prentice Hall.

Kotler, P. (2003), Marketing Management, 11th Edition, London: Prentice Hall.

Motley, B. L. (2003), 'How to Thrill Your Customer', Journal of marketing, 35, 50.

Oliver, R. L. (1997), Satisfaction: A behavioural Perspective on the Consumer, New York, McGraw Hill.

Perreault, W. D. Jr, McCarthy E. Jerome, Parkinsen S. and Stewda K. (2000), Basic Marketing, European Edition, London: Mcgraw Hill.

Sheth, J. N., Mittal, B. and Newman, B. I., (1999), Customer Behaviour: Consumer Behaviour and Beyond, London: Dryden.

Winstanley and Martha (1997), What Drives Customer Satisfaction in Commercial Banking, 12, 36.

Winstanley and Martha (1997), Customer Satisfaction Affects Buyer Action and the Bottom Line, 12, 36.
Table 1
The Relationship Between Dissatisfaction and Loyalty

Would you continue to use the
network if prices tend to be the highest
and network, quality and related
services relatively poor?                  Total

                    Yes   Yes   No    NR

Have you ever              22   143    0     165
been dissatisfied   No      5     8    0      13
at any time with    NR      0     0    2       2
your network?
Total                      27   151    2     180

Table 2
Level of Satisfaction And Loyalty

Would you continue to use the
network if prices tend to be the
highest and network quality and
related services relatively poor?               Total

                               Yes   No    NR

What is your    Highly
satisfaction    Satisfied        3     4    0       7
level with
your service
provider?

Total           Satisfied       18    93    0     111
                Indifferent      4    36    0      40
                Dissatisfied     2    18    0      20
                NR               0     0    2       2
                                27   151    2     180

Table 3
Reasons for Loyalty

                                         Valid
                     Frequency    Per     Per    Cumulative
                                 cent    cent     Per cent

Valid   contacts             1      .6      .6           .6
        Contacts            17     9.4     9.4         10.0
        Love                 1      .6      .6         10.6
        Loyal                1      .6      .6         11.1
        NA                 151    83.9    83.9         95.0
        NR                   4     2.2     2.2         97.2
        Satisfied            3     1.7     1.7         98.9
        Wider                2     1.1     1.1        100.0
          coverage
        Total              180   100.0   100.0

Table 4
Reasons for Disloyalty

                                                Valid
                            Frequency     Per     Per    Cumulative
                                         cent    cent     Per cent

Valid   Cost effective             53    29.4    29.4         29.4
        Diff Services               2     1.1     1.1         30.6
        NA                         28    15.6    15.6         46.1
        Network failure             4     2.2     2.2         48.3
        No satisfaction            19    10.6    10.6         58.9
        NR                          7     3.9     3.9         62.8
        Other alternative           1      .6      .6         63.3
        quality service            63    35.0    35.0         98.3
        Save money                  1      .6      .6         98.9
        uneasy to use               1      .6      .6         99.4
        waste of resource           1      .6      .6        100.0
        Total                     180   100.0   100.0

Table 5
Reasons for The Use of More Than One Network

                                                  Valid   Cumulative
                                            Per     Per          Per
                              Frequency    cent    cent         cent

Valid   Contacts                     17     9.4     9.4          9.4
        Cost effective               21    11.7    11.7         21.1
        Diff Services                15     8.3     8.3         29.4
        Diff purposes                 1      .6      .6         30.0
        Economical                    4     2.2     2.2         32.2
        Have 2 phones                 1      .6      .6         32.8
        International calls           1      .6      .6         33.3
        Internet service              2     1.1     1.1         34.4
        MTN is Robbing                1      .6      .6         35.0
        NA                           77    42.8    42.8         77.8
        Network failure              20    11.1    11.1         88.9
        No satisfaction               1      .6      .6         89.4
        NR                            2     1.1     1.1         90.6
        Personal Reasons              2     1.1     1.1         91.7
        Promotion                     8     4.4     4.4         96.1
        Quality service               7     3.9     3.9        100.0
        Total                       180   100.0   100.0

Table 6
Reasons for Not Changing Network

                                              Valid   Cumulative
                                       Per     Per          Per
                          Frequency   cent    cent         cent

Valid   Network Quality          19    10.6    10.6         10.6
        Low Charges              15     8.3     8.3         18.9
        To Stay                  39    21.7    21.7         40.6
           linked with
          loved ones
        Not to lose
          contacts               41    22.8    22.8         63.3
        Other                     5     2.8     2.8         66.1
        NA                       60    33.3    33.3         99.4
        NR                        1      .6      .6        100.0
        Total                   180   100.0   100.0

Table 7
Reasons for Switching Networks

                                     Per      Valid    Cumulative
                        Frequency   cent    Per cent    Per cent

Valid   Poor network           23    12.8       12.8         12.8
          quality
        High charges           21    11.7       11.7         24.4
        To link                14     7.8        7.8         32.2
          with others
        Others                  6     3.3        3.3         35.6
        NA                    116    64.4       64.4        100.0
        Total                 180   100.0      100.0

Figure 1: The Level of Dissatisfaction

Have you ever been dissatisfied at any time
with your network?

Frequency

YES      165     91.67%
NO        13      7.22%
NR         2     [TEXT UNREADABLE IN ORIGINAL SOURCE.]

Note: Table made from bar graph.

Figure 2: The Level of Satisfaction

What is your satisfaction level with your service provider?

Frequency

Highly Satisfied      7     3.89%
Satisfied           111    61.67%
Indifferent          40    22.22%
Dissatisfied         20    11.11%
NR                    2    [TEXT UNREADABLE IN ORIGINAL SOURCE.]

Note: Table made from bar graph.

Figure 3: Switching Network

Would you switch to another service provide if that network provides
free night calls, free week-end calls ad other superior services?

Frequency

YES     110   61.11%
NO       63   35.0%
NR        7    3.89%

Note: Table made from bar graph.

Figure 4: Combination of Networks

Combination of network

Frequency

YES     102    56.67%
NO       78    43.33%

Note: Table made from bar graph.

Figure 5: Change of Network

Have you ever changed your
network to another?

Frequency

YES      63     35.0%
NO      117     65.0%

Note: Table made from bar graph.
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Author:Bamfo, Bylon Abeeku
Publication:Indian Journal of Economics and Business
Geographic Code:6GHAN
Date:Dec 1, 2009
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