The effects of service quality on Internet Service Provider customers’ behaviour - a mixed methods study

Asia Pacific Journal of Marketing and Logistics
The effects of service quality on Internet Service Provider customers’ behaviour - a mixed methods study
Thu Nguyen Quach Charles Jebarajakirthy Paramaporn Thaichon
Article information:
To cite this document:
Thu Nguyen Quach Charles Jebarajakirthy Paramaporn Thaichon , (2016),"The effects of service quality on Internet Service
Provider customers’ behaviour - a mixed methods study", Asia Pacific Journal of Marketing and Logistics, Vol. 28 Iss 3 pp. -
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http://dx.doi.org/10.1108/APJML-03-2015-0039
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The effects of service quality on Internet Service Provider customers’
behaviour - A mixed methods study
1. Introduction
Customer retention is vital for all businesses, especially for high-tech services such as
residential Internet and mobile phone services. The providers of these services need to be
competitive with regard to many aspects of service performance and delivery in order to
retain their customers. However, there is scant information relating to customer behaviour in
high-tech services (Vlachos & Vrechopoulos, 2008; Thaichon et al., 2012). Although it is
logical to presume that service quality plays an important role in a customer's behavioural
intentions in high-tech services, there has been little academic research to evaluate the
influence of Internet Service Providers’ (ISP) service quality dimensions on customers in the
residential Internet services market (He & Li, 2010; Thaichon et al., 2014).
With an exponential increase in technology-enabled services, the attention of the services
literature has shifted to measurement and operationalisation issues in service quality
(Wolfinbarge & Gilly, 2003; Carlson & O’Cass, 2011; Kurt & Atrek, 2012). SERVQUAL
was introduced by Parasuraman, Zelthaml and Berry (1988) followed by the development of
E-S-QUAL (Parasuraman, Zeithaml & Malhotra, 2005), which is a measurement scale for
online service quality. Though E-S-QUAL appears to be more aligned with high-tech
technology services, previous literature on service quality reveals that perceived service
quality dimensions are not limited to those identified in SERVQUAL and E-S-QUAL
(Ganguli & Roy, 2010; He & Li, 2010). These scales are unsuitable to adequately address
specific issues relevant to this particular context. For instance, service quality in mobile
telecommunications industry involves the quality of mobile devices and value added servicesDownloaded by Tulane University At 04:08 02 May 2016 (PT)

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(e.g. SMS, MMS, WAP, GPRS), which are not covered in either SERVQUAL or E-S-QUAL
(Santouridis & Trivellas, 2010). Although modifications of SERVQUAL and E-S-QUAL
have been proposed for specific service contexts (He & Li, 2010), for example, Shamdasani,
Mukherjee, and Malhotra (2008) in the context of self-service Internet technologies and
Vlachos and Vrechopoulos (2008) in the context of mobile telephony, there still lacks a focus
on ISP service quality.
In addition, relationship marketing theory suggests that it is more valuable for a service
provider to maintain and develop long term relationships with customers than to focus on
attracting short lived ones (Rafiq, Fulford, & Lu, 2013). Customer retention is imperative,
especially in times of economic austerity and increasing competition (El-Manstrly &
Harrison, 2013). Furthermore, as a rule of thumb, customer acquisition costs are
approximately five times more than those associated with customer retention
(Christodoulides & Michaelidou, 2010). Previous research in marketing has demonstrated
that superior service quality increases customer loyalty and retention rates (Liang & Zhang,
2012), whereas poor service quality often results in customer complaining behaviour and
switching intentions (Zeithaml, Berry, & Parasuraman, 1996). In particular, customer
complaints have been treated as a critical issue for service providers. Taking customer
complaints into consideration, companies can understand the problems and hence address
them in a timely fashion (Barlow, 1996). An effective complaint management system can
facilitate the maximization of customer loyalty (Kemp, 1999).
Additionally, as differences exist among consumers in the demand for services, it is
necessary to partition the market into different segments (Mazzoni, Castaldi, & Addeo,
2007). Although there has been research on market segmentation, initially advocated byDownloaded by Tulane University At 04:08 02 May 2016 (PT)

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Smith’s seminal article in 1956 and discussed extensively in the literature (Dickson & Ginter,
1987; Haley, 1984; Mazzoni et al., 2007; Saporta, 1976; Wedel & Kamakura, 2003; Wind,
1978), there is limited evidence of how effective segmentation is operationalised for
customers of residential Internet services. In the ISP market, it is critical both to target and to
service specific segments effectively, as the wants and needs of today's customers differ.
Since one of the most logical bases for segmentation is the customers’ usage pattern
(Plummer, 1974), this study segments ISP customers based on their usage. Arguably,
segmenting markets by consumption patterns is relatively insightful for understanding
customers (Weinstein, 2002). By classifying customers into usage segments, service
providers can design suitable marketing strategies for each segment. Furthermore, it has been
stated that the profitability of customer retention strategies can be evaluated by industry
retention rates, segmentation by usage, and developing and accessing long-term customer
value (McDougall, 2001). In a similar vein, Weinstein (2002) reports that usage analysis can
significantly aid in customer retention. Therefore, this study endeavours to investigate
perceptions of service quality of light, medium and heavy users.
The objectives of this research study are threefold: first, to identify an ISP’s service quality
dimensions; second, to evaluate the impact of overall service quality of an ISP on customers’
intention to continue with the service provider, complaint and switching intentions; and third,
to investigate the influence of ISP customers’ usage patterns on their perceptions of ISP’s
service quality dimensions. A mixed methods study is used to investigate the effects of
service quality on ISP customers’ behavioural intentions. The issues under investigation are
sophisticated and previous studies have only employed either quantitative or qualitative
techniques. Hence, the current research adopts a mixed methods approach in order to capture
a more complete picture. A quantitative study is employed to examine the constructs andDownloaded by Tulane University At 04:08 02 May 2016 (PT)

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their relationships. Information obtained from the first stage will be explored further in the
later qualitative research in order to better understand and resolve anomalies in the
quantitative results.
2. Literature review and hypotheses development
2.1. Specific service quality dimensions
SERVQUAL measures general service quality, whereas E-S-QUAL deals with services
operated via the Internet (Vlachos & Vrechopoulos, 2008) but not the Internet service itself.
The tangibility dimension of SERVQUAL in the context of services provided by ISPs
includes infrastructure and equipment which facilitate Internet connection. However,
customers of residential Internet services are unable to visualise the type of facilities owned
or leased by their ISP. For them the tangibles are associated with attributes of service
delivery, such as downloading/uploading speed, consistency and stability of the signal
(Vlachos & Vrechopoulos, 2008). Hence a dimension referred to as “network quality” has
been proposed as a driver of overall service quality in the residential Internet services market
(Thaichon et al., 2012). Also, this dimension, which is associated with the core service
performance, accounts for reliability in this service industry. Previous research evidences that
overall service quality emanates from a stable and fast Internet network quality (Vlachos &
Vrechopoulos, 2008; Lai, Griffin, & Babin, 2009; He & Li, 2010). In the telecommunications
industry, network quality includes the quality and strength of the network signal (Wang, Lo,
& Yang, 2004), number of errors, downloading and uploading speed (Vlachos &
Vrechopoulos, 2008). This then means that any break in the Internet connectivity may lead to
low customer perception ratings with respect to service quality. Although not having been
often investigated in the ISP context, network quality is deemed to be one of the most
important drivers of overall service quality in the Korean mobile Internet service (Chae, Kim,
Kim, & Ryu, 2002), and Taiwanese (He & Li, 2010), Chinese (Lai et al., 2009), Hong KongDownloaded by Tulane University At 04:08 02 May 2016 (PT)

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(Cheng, Lai, & Yeung, 2008), Greek (Santouridis & Trivellas, 2010) and Korean mobile
phone services markets (Kim & Yoon, 2004).
Moreover, customers look for responsiveness and problem solving capabilities of technical
and customer service staff when assessing high-tech service providers, such as ISPs
(Santouridis & Trivellas, 2010), consistent with the responsiveness and assurance dimensions
in SERVQUAL. Abdolvand, Charkari, and Mohammadi (2006) state that service providers
need to provide superior customer support in order to enhance their service quality. A study
in the Turkish telecommunications industry demonstrates that handling customers’
complaints efficiently is an important factor which contributes towards perceived quality
(Aydin & Özer, 2005). Similarly, a customer who receives a prompt and reasonable response
from the service provider following a service failure is more likely to evaluate highly the
company (Álvarez, Casielles, & Martín, 2010).
On the other hand, businesses need to provide reliable and up-to-date information in order to
support decision making of their customers (Kim & Niehm, 2009; Hasley & Gregg, 2010).
Also, recent research illustrates that the more customers use the Internet, the more they
require and appreciate online help (Oracle, 2012). This suggests that customers of other
telecommunications services, such as cable television and telephony services, might not
consider information support as significant as those of an ISP do. This can be explained by
the fact that not all customers in telecommunications market, except for Internet subscribers,
have access to online information support, especially in developing countries. For instance,
there are almost 85 million mobile subscribers in Thailand and 135 million subscribers in
Vietnam (CIA, 2013). However, only 31.9 per cent of the Thai population (NBTC, 2014) and
40 per cent of Vietnamese users (Freedom, 2012) use online services via their mobile phones.Downloaded by Tulane University At 04:08 02 May 2016 (PT)

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On the other hand, the number of residential Internet users account for 26 per cent
(approximately 20 million users) and 36 per cent (approximately 30 million users) of the
population in Thailand and Vietnam, respectively (WorldBank, 2014). As such, there is still a
group of mobile service customers who do not access Internet and hence, do not use online
information support. Consequently, in contrast to ISP users, who generally take advantage of
online information support, the majority of mobile phone service customers in these countries
would most likely ignore this feature. In other words, it is expected that ISP customers are
more likely to visit company websites to search for information support when compared with
customers of other telecommunication services. Taking into account these considerations, this
study endeavours to provide a more holistic picture on the unique dimensions of an ISP’s
service quality.
Furthermore, ISP users are more likely to assess company websites to look for information
support (Oracle, 2012). However, this aspect is not included in SERVQUAL which is mainly
a bricks and mortar service quality measurement scale. Christodoulides and Michaelidou
(2010) suggest that customers are able to make a more informed choice when adequate
information is provided on the company’s website. Well-designed websites are able to
provide opportunities for customer engagement (Canhoto & Clark, 2013), and they enable
customers to obtain useful information about the company’s service offerings (Huang, Kim,
& Kim, 2013). Up-to-date and reliable sources of information result in more favourable
outcomes of the service offerings (Lin, 2007), and they help to build strong relationships
between service providers and customers (Canhoto & Clark, 2013). Moreover, information
quality plays an important role in building customers’ positive perceptions of the company’s
service (Jaiswal, Niraj, & Venugopal, 2010). Therefore, it is feasible to assume that
information quality is a dimension of an ISP’s service quality.Downloaded by Tulane University At 04:08 02 May 2016 (PT)

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As the essence of Internet services is Internet related, privacy and security are more
influential in examining an ISP’s service quality as compared to service quality of other
telecommunications services, such as mobile and television services. An ISP’s server
encloses important account information of Internet users which makes customers’ personal
data vulnerable, especially when unauthorised access is granted (Rowe et al., 2011).
Furthermore, ISPs are directly involved with customers’ online security. ISPs observe and
manage traffic flowing in and out of their networks, thereby being able to reveal dubious
traffic spikes, and consequently stop harmful activities or give prompt notice to their
customers (Rowe et al., 2011). A study finds that almost 70 per cent of customers are willing
to change to another ISP who can offer more secured online services (Streamshield, 2004).
As a result, it can be concluded that customers perceive ISPs protection from privacy
invasion and cybercrime as necessary and important, emphasising the role of privacy and
security.
Privacy, often a concern of customers of high-tech services, relates to the manner in which
their personal data is acquired and used (Castañeda & Montoro, 2007; Chang & Chen, 2009).
Similarly, security refers to the extent a customer perceives the entire online transaction as
being safe, including payment methods, and systems for storing and transmitting confidential
information and protection from detrimental attacks (Chang & Chen, 2009). Customers are
prone to attribute low risks in purchasing from service providers who are reputable in relation
to their security practices (Roca, García, & Vega, 2009). Moreover, in online financial
services, privacy is shown to have a direct effect on intentions to recommend (Finn, Wang, &
Frank, 2009). Privacy and security are not covered by SERVQUAL. Though E-S-QUAL
does include privacy, it overlooks the security aspect, which is important in ISP services forDownloaded by Tulane University At 04:08 02 May 2016 (PT)