Building Telecoms Service Quality for Brand Loyalty

Abstract

Service firms dependent on high technological infrastructure operate within a different service context from typical professional service firms. As a result, there is a tendency for such service firms to deviate from the existing (customer-centric) schools of service quality definition and measurement. This becomes difficult to operationalize within the context of brand loyalty. This led the researchers to review the extant literature in the relevant subject areas with the aim of finding out whether there has been a shift in the definition of service quality for high-tech dependent service firms. Following this, a pilot study consisting one-on-one interviews and a field survey was conducted. The aim was to gain insight on the understanding of key technical managers of a telecoms operator (MTN) in Lagos, Nigeria. On the other hand, the field survey (of MTN customers) carried out was aimed to juxtapose customer perception, based on the findings in the literature, with the orientations of the managers. The results indicate a disconnect between managers’ orientations and the perception of their customers. While managers believe that their customers are loyal to their brand due to operational efficiency provided, customers indicate very high switch-over tendencies to the firm’s competitors irrespective of operational efficiency. Suggestions on how service quality can be operationalized for brand loyalty were given as well as areas requiring further research.

Keywords: services marketing, service quality, brand loyalty, telecoms

1. Introduction

Some scholars have established the relationship between service quality and other constructs (e.g. Bolton &Drew, 1991; Cronin & Taylor, 1992; Taylor & Baker, 1994; Sivadas& Baker-Prewitt, 2000; Brady & Cronin, 2001). Many of these attempts have followed the trend of focusing on service quality measurement i.e. building measurement scales based on customer perception/evaluations of the service (Brown, Churchill & Peter, 1993; Babakus&Mangold, 1992; Asubonteng, McCleary& Swan, 1996; Burgers, de Ruyter, Keen &Streukens, 2000; Brady, Cronin & Brand, 2002). As such, the operative definition of the ‘customer’ has always been the person(s) who funds the service offering by making (re)purchase decisions. Although the literature has always reaffirmed the place of the customer (as King) especially in services marketing, it is interesting to examine more specific contexts and markets with different service environments and orientations. One of such contexts is the telecommunications industry where opinions seem to vary on how the service quality should be defined and consequently, operationalized.

It must be acknowledged that the service industry varies. There are contexts which are a combination of both service and product such as the all-time product or manufactured goods industry (cf. Quinn, Doorley& Paquette, 1990).

Secondly, there are contexts which are wholly service oriented such as the professional services industry: consulting services, financial services industry, hospitality (cf. Greene, Walls &Schrest, 1994). Thirdly, there are wholly service oriented firms which depend on a high level of technical support (e.g. telecommunications); for instance, Bitner, Brown &Meuter (2000) argue that technology-infused services do not fit into the traditional definition of the services industry. Therefore, for the third category of service firms, the question of service quality has proven more difficult to define.

While the professional service firm, can easily come to terms with the consensus that service quality improvement should start with attention to customer complain points, functional and emotional values, it appears difficult for the high-tech service firm (e.g. telecommunications) to totally rely on customer evaluations in Electronic copy available at: http://ssrn.com/abstract=2213189www.ccsenet.org/ibr International Business Research Vol. 6, No. 4; 2013 90 defining service quality. This may depend on the ability of the operating environment to vary the tolerance dial (i.e. what the customer considers totally unacceptable versus what he is willing and able to tolerate). However, it can be averred that all firms are continuously in the struggle to attain brand loyalty – a construct completely woven around the customer. An interesting question therefore remains: how the service quality of a firm with high technological dependency, leads to brand loyalty. This concern will also consist of what constitutes service quality of such a firm by investigating the question conceptually as well as by drawing on insight from a pilot study.

2. Literature Review

2.1 Product Quality versus Service Quality

The ancestral home of the service quality scholarly debate can be traced to the literatures on manufactured goods and customer satisfaction (e.g. Cardozo, 1965; Howard &Sheth, 1969; Olson & Dover, 1976; Oliver, 1977, 1980; Juran, 1988; Anderson & Sullivan, 1993; Anderson, Fornell& Lehmann, 1994) which make use of the disconfirmation paradigm as a theoretical foothold. This approach to understanding quality evaluates the disconfirmed expectations of customers vis-à-vis product performance (Olshavsky& Miller, 1972; Oliver, 1980;

Churchill &Surprenant, 1982) which Churchill and Surprenant (1982) enumerate as operating on three levels: 1) expected level; 2) below expectation; and 3) above expectation. The theory, therefore, became the foundation for understanding service quality as proposed by Parasuraman, Zeithaml& Berry (1985) – forming the basis for several service quality measurement scales (Babakus&Mangold, 1992; Dabholkar, 1996; Parasuraman, Zeithaml& Malhotra, 2005; Abdullah, 2006; Landrum et al., 2009; Kelkar, 2010; van Dun, Bloemer&Henseler, 2011). Accordingly, the disconfirmation paradigm requires ascertaining customer expectations. In other words, some level of response system must be created to determine what the expectations of customers are (or are not). However, the definition of goods quality as an objective (i.e. products) rather than a subjective (i.e. services) concept by some scholars (Crosby, 1979; Garvin, 1983; Holbrook &Corfman, 1985; Zeithaml, 1988) puts the understanding of quality at a crossroad. Consequently, it triggers the idea of ‘very appropriate’ versus ‘somewhat acceptable’ measures. More illustratively, in the manufacturing of a product, the firm tries to achieve certain high (product) quality standards. These standards are considered the reserve of the firm’s technical staff in terms of knowledge, articulation and measurement. Indeed, it becomes fortuitous to observe that other product quality research efforts (e.g. Milgrom& Roberts, 1986; Rao & Monroe, 1989;Darwar& Parker, 1994) seem to pull this thinking to a more customer-based dimension. In the extant service quality discourse however, the above-stated complication does not arise. Instead what the literature records is an overwhelming focus on service quality measurement scales (Parasuraman, Zeithaml&Berry, 1988; Cronin & Taylor, 1992; Teas, 1993; Buttle, 1996; Dabholkar, 1996; Fogarty, Catts&Forlin, 2000; Dabholkar, Shepherd & Thorpe, 2000; Dean, 2004; Parasuraman, Zeithaml& Malhotra, 2005). Although, the measurement studies were preceded (and have been scantily punctuated) by attempts to theorize and conceptualize the construct (Parasuraman, Zeithaml& Berry, 1985; Cronin & Taylor, 1992, 1994; Mattsson, 1992; Grönroos, 1993; Zeithaml, Berry &Parasuraman, 1993, 1996), the dominant theme in service quality scholarly debate still remains measurement scales. Notwithstanding, attempts to refine the conceptualization of what service quality is, have adhered to the consensus that the quality of a service is best determined by customer perception (Parasuraman, Zeithaml& Berry, 1988; 1994, Bolton & Drew, 1991; Cronin & Taylor,

1992; 1994; Asubonteng, McCleary& Swan, 1996; Brady, Cronin & Brand, 2002, Dean, 2004). In addition to the debate’s evolution, a closer examination of how product quality should be defined reveals a remarkable shift from the traditional understanding of its early scholars (Crosby, 1979; Garvin, 1983; Holbrook &Corfman, 1985; Zeithaml, 1988). This new understanding, therefore, situates the so-called ‘objective’ within the ‘subjective’ definition of quality. Perhaps, one of the earliest elucidating analysis of product quality is found in Kotler, Armstrong & Cunningham (1991) where the authors use ‘performance quality’ as a synonym for ‘product quality’ when referring to quality level. According to the authors, product quality is best defined as the “level at which a product performs its functions”. The second level of defining product quality is the consistency (defects elimination) with which brands are able to deliver their initiated performance quality over a period of time. Fusing this understanding with the contributions from the services marketing literature, (see, Vargo&Lusch, 2004; Vargo& Morgan, 2005; Lusch&Vargo, 2006), a product need not have the highest level of performance for it to score highly in terms of service quality. While a product may operate at a given performance level, its ability to fulfill it’s slated ‘performance level’ consistently falls within the domain of service quality – which is inclusive of the various points of interactions the customer may have with the brand. Through this understanding, the product (though made up of physical, tangible features) is situated within a service; that is, it goes further to ‘the how’ of

www.ccsenet.org/ibr International Business Research Vol. 6, No. 4; 2013 91 consistently delivering the tangible product to the customer rather than merely the physical attributes of the product. Therefore, the brand defines the performance level of its product range based on customer perceptions obtained through in-depth market research prior to market entry. Certainly, this decision is also moderated by the market segment the brand chooses to operate in. However, it does not eliminate the ‘customer perception’ function. Total Quality Management (TQM) models on the other hand, appear to focus only on general management processes (e.g. Powell, 1995; Porter & Parker, 1993; Kanji, Malek&Tambi, 1999) in the delivery of both product and service quality.

2.2 Service Brand Loyalty

Several researchers (Phillips, Chang &Buzzell, 1983; Parasuraman, Zeithaml& Berry, 1985; Aaker, 1991; Bolton & Drew, 1991; Philip &Hazlett, 1997; McDonald, de Chernatony& Harris, 2001) agree that there are several strategic benefits of service quality (e.g. brand equity, profitability, ROI, market share increase and GNP). Based on these findings, we can conclude that these strategic benefits cannot fully be operationalized outside the ambit of the customer loyalty to the brand. To this end, empirical studies have been carried out to establish the relationship between other constructs and service/brand loyalty (Cronin & Taylor, 1992; Bouldinget al., 1993; Johnston, 1995; Gremler& Brown, 1996; Bloemer, Ruyter&Peeters, 1998; de Ruyter, Wetzels&

Bloemer, 1998; Caruana, 2002; Yi &Jeon, 2003). These studies have also identified extraneous variables defining this relationship (e.g. switching cost, customer satisfaction and brand image) However, the question of how the brand loyalty framework is to be constructed remains an elusive concern for even academic scholars – especially when a relationship has to be established between service quality and brand loyalty.

Building the brand loyalty framework requires an examination of purchase behavior studies – through which brand loyalty is operationalised. In other words, research has long established that it implies a repeat purchase pattern in favour of one brand against competitors per individual customer (cf. Ehrenberg, Goodhardt&Barwise, 1990). Invariably, brand loyalty implies profitability for the favored firm. Contrary to Ehrenberg,

Goodhardt&Barwise’s theory which restrains loyalty to repeat buying – to be achieved by deep market penetration – other researchers (Dick &Basu, 1994; Bloemer, Ruyter&Peeters, 1998) recognize that other variables (e.g. public policy, monopoly, switching barriers and competition) play out to determine market share figures. In addition, earlier scholars (e.g. Day, 1969; Bass, 1974) have criticized the use of repeat purchases as a measure for brand loyalty for its lack of conceptual and empirical soundness. Therefore, merely relying on market penetration and expansion may only provide a short-lived advantage rather than a strategic brand building approach. Real brand building for brand loyalty requires an appreciation of the brand equity components towards understanding those psychosocial (as well as functional) values endearing customers to the brand rather than just repeat purchases (Aaker, 1991; Gremler& Brown, 1996; de Chernatony&Dall’OlmoRiley, 1998). This approach will reveal customers’ intentions and tendencies to (re)purchase – a more reliable indication of service loyalty. Following this, the service brand can achieve higher competitiveness by exploring avenues to eliminate loyalty barrier factors (e.g. switching barriers) as a strategy to maximize loyalty-volume.

Figure 1. Customer loyalty framework (Gilmore, 2003) Gilmore’s (2003) model – drawn from earlier studies (Jacoby &Kyner, 1973; Dick &Basu, 1994; Oliver, 1997) – puts this more succinctly by explaining a four-stage process leading to loyalty which begins at the level of the cognition (see Figure 1). At the cognitive level, the service experience of the customer is subjected to the rigors of his mental processes. This is judged on the basis of the customer’s understanding of himself and of the world – to determine what is acceptable and what is unacceptable. This phase is best explained using a social theory – cognitive dissonance – to understand an individual’s disposition towards stimuli received from his environment

(cf. Festinger&Carlsmith, 1959; Pallak& Pittman, 1972; Elliot & Devine, 1994; Aronson, 1997). The result is the attitudinal inclination towards the brand; wherein all of the positive emotional and psychosocial valuations are deposited. This is followed by a desire to demonstrate an appreciation of these positive valuations (i.e. the conative level). However, (as discussed earlier) whether such a desire is actually fulfilled is a different concern

www.ccsenet.org/ibr International Business Research Vol. 6, No. 4; 2013 92 which depends on multivariate barriers impeding the commitment. Therefore, in many instances, loyalty to a brand occurs without a purchase commitment. Conversely, purchase commitments do not necessarily imply brand loyalty. Rather, voluntary efforts by (potential) customers to inconvenience themselves in favor of a given brand (e.g. word-of-mouth communication and brand advocacy) better reflect their loyalty to a particular brand (Gremler& Brown, 1996; Gilmore, 2003). Such efforts accumulate goodwill for brands which come very valuable in the long-term.

3. Research Method

A pilot study was chosen to gain insight on;

1) The understanding key technical employees of a telecoms service firm have of service quality and brand loyalty.

2) How customers of the telecoms service firm perceive its service quality and 3) whether customers of the telecoms service firm indicate loyalty to the brand. To this effect, two categories of respondents were chosen for this study: 1) senior technical employees of MTN (a telecoms service firm in Nigeria) and, 2) customers of MTN. Data collected from regulators of the telecoms industry in Nigeria.

(NCC) indicates that MTN has the largest market share (approximately 49%) in the GSM category of telecoms providers as at September, 2012 (see Table 1). In addition to mobile telephony, the firm also provides broadband internet services for the Nigerian market. This background informed the choice of the service provider under study versus its competitors.

To this effect, five MTN technical-oriented managers were interviewed to gain insight on 1) how they perceive their brand, 2) their understanding of how the service quality of their brand should be measured and, 3) how they would explain MTN’s performance vis-à-vis its large market share. These employees were selected on the basis of years of experience with the firm (i.e. ranging between 3 – 6 years) as well as the key technical positions they hold: network managers, transmission engineers, inter-connection and planning managers. The responses of respective managers were further tabulated to aid understanding as well as to reflect key contributions during the interviews (see. Table 2).

Table 1. Telecoms operator data in Nigeria (note 1)

Latest Data: Quarter 3 – 2012

OPERATOR Dec-11 Mar-12 Jun-12 Sep-12

MTN Nigeria Communications 41,641,089 42,898,581 43,184,470 45,639,749

Globacom Limited 19,886,014 20,846,604 21,986,864 22,260,822

Celtel Nigeria Limited (AirTel) 18,028,385 18,600,435 19,820,440 21,101,758

MTEL Limited 258,520 258,520 258,520 258,520

EMTS Limited (Etisalat) 10,752,230 11,927,840 13,063,445 14,392,531

Sub-Total (GSM) 90,566,238 94,531,980 98,313,739 103,653,380

Operator Data: Table 1 above displays the number of subscribers per each individual telecoms operator on a quarterly basis.

The second stage of data collection involved a survey of MTN customers in the Eti-Osa region of Lagos Island which consists of Ikoyi, Victoria Island and the Lekki Peninsula in Lagos, Nigeria. This region is host to both the head office of MTN as well as six strategically placed MTN offices/centres. Lagos Island is also at the core of Nigeria’s commercial nerve Centre with blue-chip firms such as Exxon Mobil, Chevron, Google, NLNG, Accenture, and virtually all of Nigeria’s financial services firms operating from the island. MTN customers residing, operating their businesses or working in this region of Lagos sit comfortably in either the middle or upper class of the Nigerian society. A simple random sampling technique was therefore, employed to constitute a sample size of 150 respondents – over 74% of which were eligible to work. This technique provided equal opportunity for the members of the study population. Although the larger margin of sampling error ascribed to this technique is well acknowledged, it appeared to be the most appropriate for a rapidly mobile study population since it was difficult to determine just how many subscribers were on the Island at a given time. Moreover, the complexity was made more apparent with the inability of the firm to provide specific data necessary for stratified sampling.

It may be important to reiterate that the objective of the study is to gain insight on employee and customers’ understanding of the service quality and brand loyalty of a service firm rather than actually measure service quality perceptions. Following this, we found that building a measurement scale through a scale purification process was unnecessary neither was it necessary to adopt an existing scale due to the highly contextualized nature of the research. Therefore, the data collection instrument used for the MTN customer survey was a structured questionnaire designed to gain insight on customer perception of the service quality and their loyalty

www.ccsenet.org/ibr International Business Research Vol. 6, No. 4; 2013 93

to the brand. In effect, six critical questions were built into the questionnaire and have been selected for analysis.

Respondents were required to give their ratings on possible categories rather than on scaled items (see Appendixs 1 – 6).

Table 2. Responses of MTN technical employees

 Respondent 1 Respondent 2 Respondent 3 Respondent 4 Respondent 5

  Job function Interconnect Manager, Fixed network planning Transmission core planning engineer IP planning engineer

Team lead IP planning

Q1 Duration with MTN 4 years 4 years 3 ½ years 4 years 6 years

Q2 Judgment on MTN

quality

Improving Excellent Fantastic Excellent Superb

Q3 How do you measure

quality?

Meets standards set by stakeholders

Product life span &revenue generated

Market share

How it meets with customer requirements

Durability & general appeal to customers

Q4 Will you say your customers experience the same quality

Near perfect yes

 Yes but not

always

Yes

Q5 Do you think MTN’S market share is as a result of quality

It could be, but mainly innovation and sustainability

Yes & also the brand

Yes & wider coverage

 Yes & product integrity

Yes

Q6 To what extent does

MTN quality influence customer loyalty

To a great extent, To a great extent ,To a large extent,  To a great extent,  A very large extent

Q7 other reasons for brand loyalty

More people use it Competitive price,

CSR initiatives &innovation

Wider coverage Improved customer relationship

Limited choices

Description: As shown in Table 2, five key MTN technical managers give responses on service quality delivery and reasons for brand loyalty.

4. Discussion of Findings

Of the five employees interviewed, only two (employees 4 and 5) recommend that that the brand’s quality of service should be measured from the perspective of the customer (Table 2, Q3). Although the use of the phrase “standards met by stakeholders” (by respondent 1) includes customers in a broad sense – as it is used in the marketing literature – stakeholders in this context refers to investors, suppliers and other firms who provide ancillary services to MTN. This implies that technical staff of MTN subscribe to the orientation that for tech-laden services, the firm is in a better position to understand what is meant by ‘quality’ and as a result, define how it should be executed. This orientation does not appear to be isolated from findings of previous research.

Rather, it corresponds with Gilmore (2001) and Marr & Neely (2004). For instance, research findings indicate that telecoms service firms are usually biased towards operational efficiency measures as against intangible value drivers (Miciak&Desmanais, 2001). In so doing, they interpret operational measures as service quality measures in some cases, and in other cases, focus on operational measures as the basis for service quality – while totally abandoning customer perception of attitudes and behaviors of the firm’s employees. Contrary to this

one-dimensional view, a recent research work (qualitative and scale development) towards building a service quality measurement scale for a call center (see. van Dun, Bloemer&Henseler, 2011) reveals ten dimensions for measuring service quality consisting of both operational and psychometric measures: accessibility, waiting time, voice-response-unit, knowing the customer, empathy, reliability, customer focus, customer satisfaction, trust and affective commitment.

Also, there is a close consensus by the employees (save, respondent 4) that they deliver high service quality to their customers consistently (Table 2, Q4). This impression appears to be consistent with customer perception of service quality – which 55% of surveyed customers ranked highly (see Appendix 2). This implies that to a highly significant degree, there is an indication that MTN is perceived as delivering high service quality. Again, this is only an indication rather than conclusive evidence since the questionnaire item is neither designed as a scaled item nor is the questionnaire itself, a standardized service quality measurement instrument. For question 4 (Table  www.ccsenet.org/ibr International Business Research Vol. 6, No. 4; 2013 94 2, Q4), the employees give reasons for the large market share as bordering on the firm’s efforts and activities such as its ability to be consistently innovative, its brand communication and strong market penetration. ‘Product integrity’ given as a reason for large market share by respondent 4 (Figure 1, Q5), is similar to innovation consistency earlier stated by the employees. In addition, all employees are certain that the service quality of the

firm is the causal antecedent of customer loyalty to their brand. Again, it should be noted that the ‘service quality’ referred to is based on the coherence of their orientation discussed in section 2.1 above, and buttressed by their responses as shown in Table 2. Certainly, the product orientation is even more apparent with the employees’ responses to question 7 (Table 2, Q7).

Evidently, the responses of employees 1 and 3 to question 7 (Table 2, Q7) coheres with Ehrenberg, Goodhardt&Barwise’s (1990) theory which relies on deep market penetration as a strategy for gaining brand loyalty.

However, it is interesting to note the response of employee 5 who indicates “limited options” which appears to be consonant with the arguments of more recent brand loyalty scholars (e.g. Dick &Basu, 1994; Bloemer, de Ruyter&Peeters, 1998) who indicate that switching barriers could hinder loyalty to a brand by preventing potential (loyal) customers from choosing their preferred brand. The responses of employees 2 and 4, however, seems to be a departure from the orientations of their colleagues in this instance – by proffering strategic branding reasons for loyalty: CSR, customer relationship, competitiveness and innovation.

Juxtaposing the responses of the MTN employees with customers’ understanding and perception of the firm’s service quality and brand loyalty reveals a significant level of discord; for instance, Appendix 4 shows that only 35% of respondents agree that they use the service because of its quality. This implies that although, customers rate the (possibly, operational) quality of the firm highly, there could be other factors pulling customers to the brand. In another vein, granted that operational quality is guaranteed, it requires much more to endear a customer to a brand to the level of loyalty. This is reinforced by about 45% of respondents who admit that the reason they have remained with the network is because it provided their first phone number and switching to a different(perhaps, preferable) service provider implies they will suffer the consequence and inconvenience of changing their phone number (see Appendix 6). In addition, an overwhelming 68% of respondents admit that they will switch to another network if it offers the same or better services (see Appendix 5). This high tendency to switch to MTN’s competition invariably represents a very low indication of customer loyalty to the brand despite the assumptions of MTN employees (see Table 2). Furthermore, it also indicates that if the switching barriers could be reduced or eliminated, MTN may lose many of its customers. On the other hand, evidence from Appendix 2 and 3, show a diversion from the data in Appendix  4, 5 and 6. Approximately, 45% of customers indicate that they have high ratings for MTN’s quality and there also seems to be a high customer satisfaction level by 47% of respondents for the quality of service (see Appendix 3). This led the researchers to believe that the results from the field survey are not very conclusive. Nonetheless, it provides indications that on the basis of customer loyalty to the MTN brand, there is a huge gap between the perceptions of employees and intentions of customers.

5. Conclusion

The literature on service quality has been furnished by a long tradition of very rich debates. As much as many of these studies have shown dissenting opinions in terms of theory and measurement, there is an agreement on what perspective it should be measured – the customer’s. However, as shown in the findings from the one-on-one interviews with key technical managers of a telecoms service firm, there seems to be an impression, within the circles of management, that high-tech dependent service firms should define what service quality is. As a result, in the measurement of the quality of service, such firms tend to focus on operational dimensions which are more related to the technology necessary to operate and deliver the service. This does not imply that telecoms service firms are not concerned about measuring service quality from the perspectives of customers. Indeed, many telecoms firms carry out regular surveys. However, the literature has shown that there is a tendency to populate such measurement instruments with operational questionnaire items while excluding relevant psychometric dimensions. Therefore, the findings of our field research – in a different business context – further corroborate what is found in the call center measurement literature.

On the other hand, results from the survey of customers of the telecoms firm under study, further confirm the impressions of MTN employees in terms of the level of operational efficiency. The results also indicate that it is not enough for a firm to offer high service quality. Indeed, services marketing scholars (e.g. Grönroos, 1982) continue to reiterate this point by stating that service processes (i.e. points of interaction) lead to the high score points that matter most to the customer. Service firms can then borrow from the contributions of Kotler, Armstrong & Cunningham’s (1999) explication of product quality by choosing to operate at a chosen operational level and focusing more attention to the consistency of excellent service delivery. If therefore, the service firm is to achieve brand loyalty, it must focus attention to aligning with the emotional and psychosocial values of its  www.ccsenet.org/ibr International Business Research Vol. 6, No. 4; 2013 95.

Customers in its service delivery while not shifting attention from its strategic brand building efforts to reinforce its commitment to those psychosocial values.

As indicated earlier, the purpose of this pilot study was to gain insight on key technical employees and customers’ definition of service quality vis-à-vis brand loyalty. Further research to measure the actual level of service quality and customer loyalty to the MTN brand is therefore required for more insightful and conclusive results. Such an effort should include extensive qualitative research of existing and potential customers of telecoms services across Nigeria leading to a scale purification process and resulting in a contextualized measurement scale for service quality. While several of such scales exist in other contexts, much to the knowledge of the researchers, such a scale remains yet to be developed for the Nigerian context.