The Analysis of Antecedents of Customer Loyalty in the

The Analysis of Antecedents of Customer Loyalty in the Australian
Mobile Telecommunication Market
Hassan Shakil Bhatti*, Ahmad Abareshi and Siddhi Pittayachawan
School of Business IT and Logistics, RMIT University, 445 Swanston Street, Melbourne, Australia
Keywords: Customer Loyalty, SEM, Australia, Marketing Mix Factors.
Abstract: Marketing mix factors such as price product value, facilitating conditions, and social influence; and factors
such as customer satisfaction, customer experience, habit, hedonic motivation, performance expectancy, effort
expectancy are the major antecedents of customer loyalty. As, loyal customers may buy more services and
have a positive word-of-mouth effect. Moreover, it is evident from previous literature that the cost of selling
service to new customers is much higher than the cost of retaining existing customers. Furthermore, it is
evident fact from telecommunication industry ombudsman Australia reports that companies are still losing
customers at a formidable rate. In this context, the main aim of this paper is to examine the relationships
between these factors and customer loyalty, and the relationships among these factors in the Australian mobile
service scenario. Data for this study was obtained from 1,985 mobile phone users in Australia via online
questionnaire using a marketing company Research Now. The data was analysed by structural equation
modelling (SEM) to test all the relationships between variables in the model. The findings of this research
focus on the measurement model fit part only. The analysis results showed that perceived customer experience
is a necessary but not sufficient condition for customer loyalty. In order to generalize the findings from this
research, this research model should be used in different service industries with different geographic samples.
The contribution of this research is to model all the relationships between customer loyalty and its antecedents,
and to test these relationships simultaneously. In this paper, the effects of all the factors on customer loyalty
are tested simultaneously via structural equation modelling (SEM) and this paper only focuses on model fit.
1 INTRODUCTION
There is a significant importance of customer loyalty
in service industries (Caruana, 2002; Rai and
Srivastava, 2012). Customer loyalty has been viewed
as the strength of the relationship between an
individual’s relative attitude and repeat patronage.
The technology has been evolved with the passage of
time and service providers are doing network
upgrades. There is a furious competition among
service providers for more competitiveness and
customers’ acquirement. According to
Telecommunication industry reports TIO (2014),
customers are making complaints about network
service, quality, contract, customer service and billing
issues. The service quality has an impact on customer
satisfaction and customer loyalty (Bhatti, 2016).
Customer satisfaction is measured by a tool called
Net Promoter Score (NPS) in service industry. TIO
reports that NPS which is used to measure the
customer satisfaction for many service providers has
been dropped dramatically down, because of it there
is substantial increase in customer service complaints.
This study evaluates the antecedents which can
influence the customer loyalty in mobile
telecommunication sector. The theoretical framework
for this study is based on unified theory of acceptance
and use of technology (UTAUT 2), marketing mix
theory and expectation confirmation theory (ECT).
The identified factors such as customer experience,
customer satisfaction, effort expectancy, performance
expectancy, facilitating conditions, social influence,
price value, habit and hedonic motivation are derived
from literature review and previous studies (Brown
and Venkatesh, 2005; Escobar-Rodríguez and
Carvajal-Trujillo, 2013, 2014; Venkatesh et al., 2003;
Venkatesh et al., 2012; Wirtz et al., 2006). The
research instrument has been developed for this study
with 65 items. The online survey is conducted with a
364 respondent. The analysis for this study has beenBhatti, H., Abareshi, A. and Pittayachawan, S.
The Analysis of Antecedents of Customer Loyalty in the Australian Mobile Telecommunication Market.
DOI: 10.5220/0006419100910099
In Proceedings of the 14th International Joint Conference on e-Business and Telecommunications (ICETE 2017) - Volume 2: ICE-B, pages 91-99
ISBN: 978-989-758-257-8
Copyright © 2017 by SCITEPRESS – Science and Technology Publications, Lda. All rights reserved
91

done in R-studio programming tool using Lavaan
package partial for structural equation modelling
analysis. This study will give future directions to
businesses and researchers. This study will help in
formation of a theoretical model which can be
implemented in service industries.
In previous Literature, loyalty has been discussed
in different ways, there are two prime approaches:
behavioural and attitudinal approaches (Dekimpe et
al., 1997; Dick and Basu, 1994). Below mentioned
are the definitions from past studies. Another study
Oh (1995) from past explores the three broad
categories of customer loyalty: the behavioural
approach, the attitudinal approach and the integrated
approach. The integrated approach contains both
attitudinal and behavioural approaches. In this study,
the focus of the research is only at attitudinal
approach. The following tables presents some key
definition from previous literature.
Table 1: Loyalty Definitions in Literature.
Customer Loyalty References
Those who rebought a brand,
considered only that brand, and did no
brand-related information seeking.
(Newman and
Werbel, 1973);
Oliver (1999,p.34)
It is defined as “repeat purchase
frequency” or “relative volume of same
brand purchasing”.
(Telli,s 1988)
Loyalty has been defined from
attitudinal perspective as well.
Attitudinal loyalty includes cognitive,
affective, and conative aspects.
(Oliver,
1997,p.392);
Oliver, (1999,p.34)
Oliver (1997, p. 392) proceeds to
describe the consumer who "fervently
desires to rebuy a product or service and
will have no other."
(Oliver,
1997,p.392)
Customer loyalty is a buyer’s affection
or deep association to a product, facility,
image, or company.
(Oliver, 1999)
Oliver (1999, p.36) discussed four phases of
loyalty development.
• First, loyalty in the cognitive phase is entirely
based on either prior knowledge or experience-
based information about a brand.
• Second, loyalty in the affective phase is a liking
or attitude toward a brand. Moreover, loyalty is
defined as cumulatively satisfying usage
occasions, it implies feelings or association
towards a brand.
• Thirdly, conative loyalty is defined as customer’s
behavioural intention to keep on purchasing a
product in the future.
• The final stage of loyalty phases in which
motivated intention is changed into readiness to
act. This approach of action loyalty is linked with
behavioural approach.
For this study, the definition of customer loyalty is “A
deeply held commitment to rebuy or re-patronise a
preferred product or service consistently in the future,
despite situational influences and marketing efforts
having the potential to cause switching behaviour”
(Oliver, 1997,p.392). The service has been studied
intensively worldwide in different areas and the
unique characteristics required for customer
orientation are very well investigated in previous
studies (Harris and Goode, 2004; Oliver, 1997, 1999;
Oliver and Swan, 1989; Rai and Srivastava, 2012).
The major concepts for customer loyalty, customer
satisfaction, service quality, and customer complaints
have been highlighted in many past studies (Harris
and Goode, 2004; Mano and Oliver, 1993; Oliver,
1997, 1999; Oliver et al., 1988; Oliver and Richard,
1981; Oliver and Richard, 1993; Oliver, 1977, 1980;
Oliver, RL and Bearden 1985; Oliver and DeSarbo,
1988; Oliver and Swan, 1989; Taylor and Baker,
1994). The role of customer loyalty gains more
popularity when it is applied in customer service
context due to the direct human involvement. The
characteristics of service durability, reliability,
service delivery, and customer service etc. enhance
the integrity between service and human relationship.
Customer loyalty is very critical for any business or
service. Due to the continues evolving of services,
and marketing competitiveness, companies are now
focusing on the significance of human involvement in
form of customer loyalty and retention. Customer
loyalty has been including as the strategic objective
in decision making process due to the competition
with other companies (Rai and Srivastava, 2012).
Customer loyalty has been seen as a source of
competitive advantage (Bharadwaj et al., 1993).
Moreover, this study focuses on the customer relative
attitudes and attitudinal approach as defined by Dick
and Basu (1994) while defining different approaches
towards loyalty. In this study, the determinants of
customer loyalty as highlighted and derived from
behavioural intention are discussed. The relationship
needs to be tested in mobile telecommunication
service context.
In telecommunication industry, the main
barometer for customer satisfaction measurement is
Net Promoter Score (NPS) (Ozlem, 2009; Prajogo et
al., 2014; Reichheld et al., 1989; Reichheld and Teal,
1996). The main theme of NPS is based on feedback
from customers include the time it took to complete
requests, network reliability and coverage and
customer service issues. Moreover, the feedback on
customers’ activation episodes reflect issues with
mobile companies prepaid mobile service and the
increase in cycle time to activate. This increaseICE-B 2017 - 14th International Conference on e-Business
92

coincides with a number of changes to IT systems
with flow-on impacts to the way that mobile
companies inform customers via Keep Me Informed
(KMIs) (Ramli, 2015). Moreover, in prepaid mobile
services, the key areas of focus are to improve the
digital user experience, increase the number of
Interactive voice response (IVR) self-help options for
customers and the improvement of activation cycle
times and system stability. Clearly, mobile services
network stability can help in improving the customer
experience (TIO, 2014).
Customer acquisition which is acquiring a new
customer is most costly when compared to retaining
existing customers (Edward and Sahadev, 2011). The
consequent increase in business revenue is directly
related to the customer behavioural intention to stay
loyal and customer repurchase behaviour (Edward
and Sahadev, 2011; Santouridis and Trivellas, 2010).
Every research has several research boundaries,
hence for this study, the theoretical framework
focusses on attitudinal perspective of behavioural
intention which is customer loyalty. Technology is
evolving and changes in network along with service
upgrade can impact services (Bhatti, 2016).
Moreover, it is evident empirically in previous studies
(Islam and Rima, 2013; Kuo and Yen, 2009)that
technology change affects the customer loyalty. This
research will investigate the lack of customer loyalty
issue in the mobile service market in Australia.
According to previous studies (Aydin and Ozer,
2005; Aydin et al., 2005), it is empirically tested that
customers that are not loyal will spread bad word of
mouth and company will be in loss.
2 THEORETICAL FRAMEWORK
The term customer loyalty is a relatively a common
phenomenon used in marketing and business studies.
The extant body of literature available in field of
IT/IS adoption extensively used empirical work of
Theory of reasoned action (TRA) (Ajzen and
Fishbein, 1977; Fishbein and Ajzen, 1975; Warshaw
and Davis, 1985), Technology acceptance model
TAM (Davis 1989), Theory of planned behaviour
TPB (Ajzen, 1991), Innovation diffusion theory IDT
(Roger, 1995) and Technology adoption model 2
(TAM2) (Venkatesh and Davis, 2000). Moreover,
these studies have been extensively used to
understand the technology adoption process in
various information system, information technology
and business studies (Benlian et al., 2011; Brown and
Venkatesh, 2005; Hanafizadeh et al., 2014; Hong and
Tam, 2006; Hsu et al., 2007; Pagani, 2004).
Although, there are many factors such as
demographics, research area, socio-economic profile
of the participants which can impact analysis, validity
of robustness and predictive ability of these models.
Similarly, unified theory of acceptance and use of
technology (UTAUT) Venkatesh et al., (2003)
presents the four factors such as performance
expectancy, effort expectancy, social influence and
facilitating conditions effecting the behavioural
intention and user actual behaviour. The UTAUT
model is combination of eight theories mentioned
above. Furthermore, a revised extension UTAUT 2
model is proposed by researcher Venkatesh et al.,
(2012) which imputes the pricing, habit and hedonic
motivation factors in the UTAUT model. The basic
motivation of this study is to propose a synthesized
single framework which improves parsimony,
descriptive power, and predictive ability and to
overcome the basic limitations of the existing models.
In the current model UTAUT 2 is only focusing on
user behaviour and this model doesn’t discuss the
customer satisfaction and customer experience
impact on customer behavioural intention to stay
loyal. It is therefore, imperative to understand the
customer loyalty of mobile telecommunication
service in an integrated framework in the back drop
of an extension of established IT/IS adoption theories
and specific dimensions required in view of inherent
characteristics of mobile services.
In previous studies (Benlian et al., 2011; Liu,
2012; San Martín and Herrero, 2012; Shin, 2009;
Turel et al., 2007; Zhou and Lu, 2011), major theories
such as theory of planned behaviour, technology
acceptance model, unified theory of acceptance and
use of technology, SERVQUAL model, and social
influence theory are used to address user adoption,
behavioural intention to stay issues in service
industries. In this study, the focal point of study is the
attitudinal perspective of behavioural intention. The
relationships between customer experience and
customer loyalty; and customer satisfaction and
customer loyalty are conceptualised by using the
theoretical underpinning of customer expectation
confirmation theory. As, a customer’s experience can
be defined as the expectation gap between the level of
customer experience that the customer thinks they
should be getting (built up by marketing promises and
other experiences) and the level they actually receive
(Millard, 2006). Moreover, the relationship among
marketing factors such as product price value,
physical conditions and customer loyalty are
conceptualised with the support of unified theory of
acceptance and use of technology. The constructs
such as product price value, facilitating conditions,The Analysis of Antecedents of Customer Loyalty in the Australian Mobile Telecommunication Market
93