The effects of service quality on ISP customers’ behaviour - a study

This research report, published in the Asia Pacific Journal of Marketing and Logistics, investigates the effects of service quality on the behavior of Internet Service Provider (ISP) customers using a mixed-methods approach. The study aims to identify key service quality dimensions, evaluate the impact of overall service quality on customer intentions (including retention, complaints, and switching), and examine how ISP customer usage patterns influence their perceptions of service quality. The report reviews relevant literature, develops hypotheses, and explores specific service quality dimensions such as network quality, responsiveness, and information support, which are crucial for customer satisfaction and retention in the ISP market. The research also segments ISP customers based on their usage patterns (light, medium, and heavy users) to understand their unique needs and preferences, providing insights for designing effective marketing strategies and improving customer retention rates. The study emphasizes the importance of customer retention in the competitive ISP market and highlights the value of understanding customer complaints and usage patterns to enhance service quality and customer loyalty.

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. -
Permanent link to this document:
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 services
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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 by
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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 and
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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 Kong
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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.
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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.
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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 for
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the reasons mentioned earlier. Despite a lack of evidence in the ISP literature, privacy and
security have been examined in various services settings, especially mobile Internet services
(Parasuraman, Zeithaml, & Berry, 1985; Wolfinbarge & Gilly, 2003; Ha & Stoel, 2012).
Previous research reports that security and privacy are positively related to service quality
(Wolfinbarge & Gilly, 2003; Ha & Stoel, 2012).
Having addressed the dimensions of network quality, customer service, information quality,
and privacy and security in high-tech residential Internet services, it is of interest that,
different customers have distinct needs and require tailored approaches (Mazzoni et al.,
2007). Segmentation can boost marketing success and leverage a service provider’s capability
to take advantage fully of particular marketing opportunities (Weinstein, 1987). Many
researchers (Ringle et al., 2013) claim that it is not adequate to examine a single homogenous
population in models to comprehend the structural relationships (Mazzoni et al., 2007; Ringle
et al., 2013). Segmentation is the process of partitioning a heterogeneous market into
different groups of customers who share similar characteristics or who have the same
responses to marketing communications (Ko et al., 2012). This study segments the Internet
services market on the basis of customers’ usage pattern, one of the most valid bases for
segmentation in high-tech services (Wedel & Kamakura, 2003; Mazzoni et al., 2007).
Understanding consumption patterns is an imperative step in obtaining the complete picture
of customers (Weinstein, 2002). It is found that usage pattern of customers can be used to
help management to enhance customers’ longer-term loyalty (Li, Shue & Lee, 2006).
Customers with various usage levels tend to behave differently. Research shows that Internet
usage level usually determines how much value individuals derive from the Internet
(Goldfarb & Prince, 2008). As such, usage level could affect their perception of ISP service
quality. In other words, customer perceptions on service quality dimensions might be
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different among customers with different Internet usage levels.
Moreover, segmentation by usage is beneficial in determining the profitability of customer
retention, as well as creating retention strategies (McDougall, 2001). Supporting this idea,
Weinstein (2002) conjectures that usage analysis can help achieving customer retention. In
this process, customers are generally segmented as heavy, medium and light users. An
average Internet user spends from 9 hours (Thailandnet, 2013) to as much as 20 hours weekly
(ACMA, 2012). Heavy users usually spend more than 29 hours on the Internet every week
(Assael, 2005; Thaichon & Quach, 2013), whilst light users only use the Internet for less than
9 hours per week. Customers with differing usage patterns may generate different attitudes
towards ISP service quality. For instance, Internet users spending a vast amount of time
online, such as online game players (Thaichon & Quach, 2013), may possibly consider
network quality as the dominant dimension influencing service quality. On the other hand,
light users may perceive customer service as their primary interest, since they are usually
unfamiliar with technical issues. Therefore, the following hypothesis is formulated:
H1: The importance of service quality dimensions (i.e. network quality, customer
service, information quality and privacy) is perceived differently across the three
segments of light, medium and heavy users.
2.2. Outcomes of service quality
As service quality is considered the main determinant of customer loyalty, any improvements
to it are vital for the success of service-based businesses, (Zeithaml et al., 1996; Prentice,
2013). Perceived service quality contributes towards cognitive evaluation and enhanced
customer beliefs about service quality dimensions, which are likely to fortify repeat purchase
(Dick & Basu, 1994). Zeithaml et al. (1996) empirically demonstrate the manner in which
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service quality and intentions to stay are related. Service quality is a determinant of whether a
customer ultimately remains with, or defects from, a service provider. A high level of service
quality encourages customers to repurchase (Zeithaml, Parasuraman, & Berry, 1990;
Zeithaml et al., 1996; Prentice, 2013). Therefore, the following hypothesis is formulated:
H2: The positive perception towards service quality influences the intentions to stay
with the service provider.
At the other end of the spectrum, inferior service quality results in unfavourable behavioural
intentions, which manifest as exit or switching intention (Zeithaml et al., 1996), and
complaint behaviour (Sabiote & Roman, 2009). In the present study switching intention
represents negative consequences for a service firm, and is described as the likelihood of
moving from the current service provider to another (Zeithaml et al., 1996). Numerous
studies report that the quality of the interaction between companies and their customers
influences a customer's response to failures of services (Kelley, Hoffman, & Davis, 1993;
Berry, 1995). In fact, failures in service performance are likely to lead to intention to switch
(Miller, Craighead, & Karwan, 2000). Keaveney (1995) proposes several factors for
switching behaviour, such as core service failures and failed service encounters. Zeithaml et
al. (1996) assert that service quality is negatively related with propensity to exit. In line with
this thinking, Headley and Miller (1993) confirm that there exists a significant relationship
between perceived service quality and switching intentions in medical services. Additionally,
service quality is found to be a precursor of customers' intention to switch in hospitality
industry (Ladhari, 2009). Based on the foregoing discussion, we propose the following
hypothesis:
H3: The negative perception towards service quality influences customers’ switching
intention.
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Additionally, unhappy customers do just switch passively but may actively complain, with
the consequent influence of their word of mouth comments being negative (Dube & Maute,
1996). Complaint behaviour occurs when an individual engages in negative communications
involving a product or service (Jacoby & Jaccard, 1981). Day and Landon (1977) suggested a
two-level tiered categorisation of actions which outlines the complaint behaviour. The first
level differentiates action from no action. The most likely explanation for taking no action is
that it is not worth the time and effort (Day et al., 1981). The second distinguishes public
actions from private actions. Private actions consist of word of mouth communication, and
behavioural change (Blodgett, Hill, & Bakir, 2006). Public actions include complaints
targeting the parties involved in the transaction, for example, suppliers and distributors, and
to third parties, such as consumer affair agencies, media and regulatory bodies (Blodgett &
Granbois, 1992). Given that the two complaint types may differ in their foundations and
results, Singh (1988) proposes three types of complaint behaviour: (1) voice responses
(seeking redress from the seller or no action); (2) private responses (word of mouth
communications); and (3) third-party responses (seeking assistance from media, customer
protection bodies or taking legal action). Direct complaints to service providers give the
company an opportunity to correct its mistakes, albeit with the possibility of damaging its
reputation. However, private responses result in negative word of mouth which has an
adverse influence on service providers’ credibility, and, as a result, decreases the
effectiveness of its efforts to attract new customers (Zeithaml et al., 1996). Based on the
foregoing discussion, we propose the following hypothesis:
H4: The negative perception towards service quality influences customers’ intentions to
complain.
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