Rmm Proj Final (2)

8/3/2019 Rmm Proj Final (2)

1/30

Broadband customer

satisfaction affects loyalty

towards the Company

Spring 2010


2/30

Broadband Service Research ProjectUniversity of Central Punjab

ACKNOWLEDGEMENTS

We are very thankful to Allah Almightywho has given us the power and ability to

think and judge the matters and then to

make use of the blessed abilities. Our

most respectable teacher Mis Khansa is

the source who directed us to apply ourabilities in the correct direction. Special

gratitude to our Professors, Parents and

Friends for their encouragement and

support.

Research Methodology 2


3/30


Abstract

The purpose of this research was todetermine if a relationship existed betweendifferent levels of customer satisfaction inBroadband Internet services and Customer

loyalty towards a service provider. Previousresearch on this relationship has provided

mixed results. Our research shows amoderate positive relationship exist

between the level of customer satisfactionin Broadband Internet services and

Customer loyalty towards a serviceprovider. While there could be severalreasons for this relationship, these resultssuggest that there is a difference in loyaltylevel of customer as the level of satisfactionvaries. In this study our purpose was just tofind whether a satisfied customer result as aloyal customer of any particular company or

not.



4/30


Table of Content:-


CHAPTE

R

TITLE PAGE NO

1 Introduction 6Background 6Objective 7Significance 8

2 Review of literature 93 Theoretical framework 104 Hypothesis and Operationalization of Variables 125 Research Design 16

Survey Research 16Population 16Sampling Design 16Tools of data collection 17Data Processing 18Data Analysis 18

Score Index 19Bivariate table 19

General Findings 216 Presentation of findings 20

Testing Hypothesis 20Discussion 21

7 Summary, Conclusions and Recommendations 22Summary 22Conclusion 22Recommendation 23

References 24Appendix 25


5/30


List of tables:-

Table Title Page

No1.1 Level of Broadband customers satisfaction is

positively associated with level of loyalty

20

List of Figures:-

Figures Title Page

No1.1 Schematic diagram 11

1.2 Linear positive relationship 21



6/30


Introduction:-

Background:Consider a person who does not feel any sense of loyalty towards

his broadband Internet Service Provider, and is always in search of any

better alternates available in the market. Such a customer as soon as hefinds any second option, he switches towards it, without even analyzing

that may be the benefits extracted from the switch are marginal. However

in such a scenario the customer is no faulty, but the Internet service

provider can be accused to buildup this kind of situation in which

customer was forced to be in a state of indifference. This state of

indifference is in a result of low level of satisfaction of the customer

towards the service he is using.

Customer Loyalty with a company is very important for the successof any business system. For service-oriented businesses like the

broadband Internet segment of Pakistans Internet industry, one of the

key challenges is how to raise the level of loyalty of customers towards a

particular company. As Pakistan ranks 4th in broadband Internet growth

(World Broadband Statistics, 2008), customer loyalty is gaining increasing

attention since loyal customers are seen as essential components to

organizational success. So companies want to retain their customers,

since such retention will lead the company to a greater number of loyal

customers, more profits and increased market share can be gained. Whilemuch research literature has focused on Customer Loyalty and

Satisfaction and describing its determinants but not much work has been

done to determine exactly what affects customer loyalty in the broadband

internet industry. However identifying the exact drivers that have the

largest impact on customer loyalty in this sector, are still not fully

understood.



7/30


Objective:This research intended to make an explanatory study into the aspects/

attributes that force customers while deciding whether to continue with

the current Broadband Internet service provider or to switch to an

alternative provider (in other words customer retention). However, the

customer decision making process is not the same for individual

customers and the corporate customers; however we focus on individual

customers more in our research. The main objective of this research is to

ascertain the relative importance of characteristics that affect the

satisfaction and loyalty of customers in Broadband segment. We also

intend to measure the kind and direction of the relationship that exist

between Customer Satisfaction and Customer Loyalty in Broadband

industry.

Significance:In today's competitive environment gaining and maintaining customer

loyalty is becoming more and more of a challenge. Companies can no

longer afford to become complacent in their marketing efforts directed at

existing customers, particularly with the cost of new customer acquisition

increasing. An essential way to hold your ground against the competition

is by keeping existing customers happy and continuing to increase sales

to this group.

Marketing activities and new promotions directed at your existing

customers are essential to keeping in the forefront of their minds. This

also allows you to keep them apprised of new product offering and specialevents. When the marketing to existing customers is neglected, typically

you will see an "out of sight, out of mind" result. In simple words an

indifferent customer who is finding better alternatives to switch. If your

customers are then targeted by your competition attempting to acquire

their own new customers they feel no sense of loyalty to you or your

company.



8/30


Every company, even the best ones, loose customers. It's for given. To

stay at the status quo, or even grow the business you need a steadysupply of new customers to replace the old ones. Now, if your business

isn't good at customer retention, which is the ability to keep customers

loyal to the company, your company is losing a lot of business. So you

need to replace them with a lot of new customers, this is bad for business

for two reasons:

On average, it costs 5 times as much to get a new customer than to

keep an existing one.

Customers, who have bought from you before, are much more likely

to buy from you again.



9/30


Review of Literature:-

Customer loyalty is viewed as the strength of the relationship

between an individuals relative attitude and repeat patronage. The

relationship is seen as mediated by social norms and situational factors.

Cognitive, affective, and co native antecedents of relative attitude are

identified as contributing to loyalty, along with motivational, perceptual,

and behavioural consequences (Dick and Basu , 1994). In the customer

centred business, survival remains to the degree that customer

satisfaction is met and switching barriers are increased. Previous research

studies have shows that the repurchase intent was the main benefit ofcustomer loyalty. However, some had identified multiple benefits like

repurchase intent, price tolerance, willingness to recommend etc. In

reaching loyalty, vendors should manage satisfaction and switching

barriers (Naranyandas, 1998). Loyalty too has a pyramid effect that

suggests of having hierarchy in loyalty levels between customer and

vendor. Change in loyalty level will manifest itself in the presence of

specific attitude and behaviour (Aaker, 1991).

Customer satisfaction and higher switching barriers are integral part

of customer Loyalty process. Customer Retention is also primary measure

of loyalty. There is a positive relationship between changes in satisfaction

and share of wallet. In particular, the initial satisfaction level and the

conditional percentage of change in satisfaction significantly correspond

to changes in share of wallet. Income and length of the relationship

negatively moderate this relationship (Cooil et al., 2007). Loyalty and

retention although positively moderate with share of wallet it is necessary

to examine the cost of maintaining the particular customer. It is not

guaranteed that every customer loyalty generates contribution. Therefore

the concept of Customer lifetime Value (CLV) plays an important role. Increating loyalty and thereby CLV, it would be prudent to explore qualities

of loyalty. Two types of primary loyalty qualities had been identified in the

previous researches, i.e. Attitudinal Loyalty and Behavioural Loyalty, out

of which attitudinal loyalty could be the most important dimension for

marketers to monitor perceived switching barriers (Rundel Thiele, 2005).

While research literature has focused customer loyalty and describing its

determinants but not much work has been done to determine exactly

what affects customer loyalty in the Internet industry especially the



10/30


broadband segment and identifying which drivers have the largest impact

on customer loyalty in this sector, are not fully understood.



11/30


Theoretical Framework:-

A theoretical framework guides your research, determining what

things you will measure, and what statistical relationships you will look

for. Customer satisfaction in Broadband Internet service will lead to

customer loyalty towards the particular service provider; as a result there

will be an increase in the profitability of the organization. So from thefollowing we can conclude that the involved dependant variable (customer

loyalty) is positively associated with (customer satisfaction) which is

our independent variable.

The concept of customer Loyalty is understood as a combination ofcustomers favorable attitude and the behavior of repurchase. Customers

experiencing a high level of satisfaction are likely to remain with their

existing providers and maintain their subscription. According to our

research we have seen that more the customer is satisfied with the

Broadband connection he is using the more he moves up the ladder of

customer loyalty towards the particular service provider. Whereas

customer satisfaction itself consist of different dimensions or features,

which have to be fulfilled to reach loyalty. Measuring loyalty itself is a

complete procedure and is said to prevail depending on the certainattitude of the customer. The propositions can be arranged sequentially

as:-

Level of customer satisfaction increased

Less he is psychologically irritated

Lesser intentions to switch initiate

Less he is in concerned of in hunt of alternatives

Increased chances that he retains


Customer Customer Loyalty


12/30


Long term relationship develop

Level of Customer Loyalty is increased

Figure 1.1: Schematic Diagram of TheoreticalFramework



13/30


Hypothesis andOperationalization of

Variables

Hypothesis:The Level of Customer satisfaction of Broadband Internet connection is

positively associated to level of customer loyalty with the company.

Logic for hypothesis:

In theoretical framework are discussed the logics for customer

loyalty with a company when the customer satisfaction level toward theInternet connection is increased. It is a sequential effect which is self

explanatory.

Developed Hypothesis Statements:-

Higher Service Quality is associated with higher level of Customer

Satisfaction

Higher Customer Support is associated with higher level of Customer

Satisfaction

Higher Device Functionality is associated with higher level of Customer

Satisfaction

Higher Pricing Structure is associated with higher level of Customer

Satisfaction

Higher Attractiveness of services is associated with higher level of

Customer Satisfaction

Higher Convenience in procedures is associated with higher level ofCustomer Satisfaction

Higher Willingness of Long term relationship is associated with higher

level of Customer Loyalty

Higher Positive Perception is associated with higher level of Customer

Loyalty

Higher Brand likeliness is associated with higher level of Customer

Loyalty



14/30


Higher Value-added Services is associated with higher level of

Customer Loyalty

Higher Economic perception is associated with higher level of

Customer Loyalty

Measurement of variables:We have two variables in our research hypothesis which we measured in

research and surveys.

1. Level of Customer satisfaction

2. Level of customer loyalty

1. Level of Customer satisfaction:-Customer satisfaction is

an independent variable. It has features which are known asdimensions, by the fulfillment of these features the customer

satisfaction level can be attained and improved.

2. Level of customer loyalty:-customer loyalty is a dependentvariable. It has its own dimensions, by the fulfillment of those

dimensions it can be said that the customer loyalty is attained.



15/30


Dimensions and their Elements of Customer

Satisfaction and Loyalty:-

Dimensions of level of Customer satisfaction

o Service Quality

o

Customer Support

o Device Functionality

o Pricing Structure

o Convenience in procedures

o Attractiveness of services

Elements of above Dimensions

o Service Quality

(Connectivity, Speed Variation) (Question 1 and 2 in

appendix)

o Customer Support

(Waiting time, Courteous) (See question no 3 and 4)

o Device Functionality

(Signal reception, Device Suite) (See question no 5 and

6)

o Pricing Structure

(Competitive pricing, Clear rates) (See question no 7

and 8)

o

Convenience in procedures



16/30


(Bill Payment modes, Package conversion) (Question

9and 10)

o Attractiveness of services

(Bandwidth, Technology) (See question no 11 and 12)



17/30


Dimensions of level of Customer Loyalty

o Willingness of Long term relationship

o Positive Perception

o Brand likeliness

o Value-added Services

o Economic perception

Elements of above Dimensions

o Willingness of Long term relationship

(Switching intention, Annual membership) (Question 13

and 14)

o Positive Perception

(You attitude, Emotional attachment) (Question 15 and

16)

o Brand likeliness

(Reference, Will to repurchase) (See question no 17 and

18)

o Value-added Services

(Regular discounts, Prizes) (See question no 19 and 20)

o Economic perception

(Promotional activities, Odd even pricing) (Question 21

and 22)



18/30


Research Design

Survey Research:-The approach we have used to collect primary data is to communicate we

people directly. Therefore we have used Human Interactive Media. We

intend to handover Questionnaire to people to record responses from

them.

Population:In our research project our target population was basically

customers of Broadband service providers, more specifically we can say

our focus was only the customers of the companies BrainNet, LinkDotNet,

PTCL Broadband, Wateen Wireless, Wi-Tribe WiMax and WorldCall EVDO

Wireless Broadband. The population is homogeneous because we have

only taken broadband customers. The logic for choosing only these six

companies is that these are the prominent names that come in mind when

we talk about Broadband internet. The other reason for choosing them is

the easiness to approach the customers of these companies. By simply

stepping near any of the Customer Care Centers of these companies wecan easily find our target population. We have chosen Customers of these

Companies due to the reason that they are the best people who can give

perfect answers about their satisfaction and loyalty level.

Sampling Design:We used the probability sampling in our research project. We have

chosen the simple random sampling because it assures that element in

the population have an equal chance of being included in the sample. Init we assigned each member of the sampling frame a number, and then

selected sample units by a random method.

Sampling Frame:

The sampling frame being used is the list of the customers of these six

companies. These companies maintain computerized record of their

customers with the help of databases, thus we have taken some help

from them as well to confirm our sampling frame.



19/30


Sample size:

The sampling frame which we have used was the customers of above

mentioned six broadband service providers and we have taken sample

size of 3000 for our research (500 from each company). In our survey

we have used this sample size to collect data to approve our

hypothesis. The sample size can be of any gender (male or female).

Sampling Unit:

For observing the overall situation we have used the Broadband

customers as a unit of observation and to analyze all the data which we

have collected by doing survey we again used the Broadband

customers as the unit of analysis.

Tools of Data Collection:The success of a researcher depends on the data one has collected. In

order to measure level of satisfaction of broadband customers and level

of loyalty with the company we have used the survey technique. For

this purpose, we have used Questionnaire. We have given the

questionnaire to Broadband customers to collect the relevant data for

our research report.

Logic behind choosing the questionnaire technique:

We have used the questionnaire technique because our target

population was educated due to the reason that we knew that using

internet requires basic education. We do not need to take interviews if

our population is educated because interviews take lots of time and no

one has a time to give us interview.

Data Processing:We have used computerized data processing technique. From manual

Questionnaires we have converted them into Computerized Excel

Sheets.



20/30


Scoring:

As we have shown above the elements on each dimension we also have

number of statements on each element (see on pg no. for

questionnaire). We have used 5 point scale (Lickard scale) in our

questionnaire. There are positive as well as negative statements in our

questionnaire.

Level of

Satisfaction

of

Broadband

Customer

Strongl

y

Disagre

e

1

Disagre

e

2

Neutra

l

3

Agree

4

Strongl

y Agree

5

Data Analysis:-

Score Index:

Score index for level of satisfaction of broadband customers:- There were 12 statements related to the above variable; on each

statement a person could get a score of 1 to 5. Total score for a person

could range from a minimum of (1*12) =12 to a maximum of (5*12)

=60. Lower score will show low satisfaction and high sores will show

high satisfaction for their broadband connection.

Minimum score Maximum

score

12

60

To make categories class interval ranges from 12-60

12- 28 Lowest level Lowest Satisfaction29-44 Medium level Medium Satisfaction45-60 High level High Satisfaction



21/30


2. Score index for level of Loyalty of Broadband customers:- There were 10 statements related to the above variable; on each

statement a person could get a score of 1 to 5. Total score for a person

could range from a minimum of (10*1) =10 to a maximum of (10*5)

=50. Lower score will show low Level of loyalty and high scores will

show high Level of loyalty of customers with the company

Minimum score Maximum

score

10 50

To make categories class interval ranges from 10-50

10- 22 Lowest level Lowest Loyalty23-36 Medium level Medium Loyalty37-50 High level High Loyalty

Bivariate table:-

For analyzing our overall survey statistically we used the bivariate tablewhich is shown below:

Table 1.1: Level of Broadband customers satisfaction is

positively associated with level of loyalty

Level Of Customer Satisfaction

Level of

CustomerLoyalty Low % Mediu

m

% High % Total %

High 300 30 150 15 700 70 1150 38

Medium 100 10 550 55 150 15 800 27

Low 600 60 300 30 150 15 1050 35

Total 100

0

100 1000 100 1000 100 3000 100



22/30


Table Analysis:-

According to the above table the shaded % values are of specific

importance in reference to our hypothesis, whereas they are increasing

upwards, thus a upward sloping curve is observed. It means that there

is a linear positive relationship between level of satisfaction and the

level of loyalty of the Broadband customers. Further on inspection we

can see from the table that out of highly satisfied customers 70% of the

respondents feel highly loyal with the company when there is high level

of satisfaction. Whereas out of lower satisfied customers 60% of the

respondents feel lower level of loyalty towards the company when theyhave low level of satisfaction. Whereas we can see that greater % of

medium level satisfied customers are subject to medium level customer

loyalty which is 55%.This relationship can be more precisely explained

by the graph shown below:

Fig 1.2: Linear positive relationship

High

Level of Customers

Satisfaction

Low

Low High

Level of Customers Loyalty



23/30


General Findings:To do a survey, the questionnaire we have designed, includes some data

related to Broadband customers e.g. their gender, name and their

occupation. It was like:-

Name:

Gender:

Occupation:



24/30


Presentation of Findings:-

Testing Hypothesis:After doing all the analysis above, we proved that the level of

satisfaction of customers positively affects the level of customers

loyalty towards the company. We have proved it by doing analysis

through bivariate table (See table no. 1.1 on pg: 13) and by showing the

graph (see fig: 1.2 on pg: 14) which was showing the linear positiverelationship. So at the end we accept the alternative hypothesis:-

The Level of Customer satisfaction of Broadband Internet

connection is positively associated to level of customer loyalty

with the company.

And reject the null hypothesis.

Discussion:-However in the review of literature we did not find much evidenceof the dimensions and elements of customer satisfaction and loyalty but

however people of different countries and institutes have discovered

the strong relationship between customer satisfaction and customer

loyalty. With the passage of time the trend of customer retention has

increased and different researchers in the past had already pointed out

the important variables involved in retaining customers. The debate on

customer satisfaction and customer loyalty has been raised in several

researches and we have continued from the place they have left. Wecontinued by specifying the exact variables which result in increasing

the customer satisfaction towards a service provider and that

eventually results in raising the Customer loyalty with a specific

company.



25/30


Summary, Conclusion andRecommendations

Summary:-The importance of use of internet technology is raising day by day and

with it the increase in competition among service providers are also

increasing. The hot question for every company is how to retain the

customers. Previous studies have guided the companies well about the

variables they have to work on to retain their existing customers. In this

research our intentions were to conduct a basic research on the factors

that affect customer satisfaction of a Broadband Internet connection.

After a detailed review of literature we have tried to emphasis on the

factors which were not discussed in detail before. Through statistical

data analysis and figures we have clearly proved the linear positive

relationship between Broadband Customer satisfaction and loyalty

towards a company. All the date was retrieved by giving Questionnaires

to Broadband customers of six different companies. Out of the whole

population of broadband customers a sample size of 300 customers was

chosen. At the end we have accepted our alternative hypothesis and

rejected the null hypothesis.

Conclusion:-At the end we come towards our conclusion that in this fact moving world

today, when World has turned out to become a global village it is very

important to provide state of the art technology of internet to people so

that they can cope up with the fast pace of life style today. It is not only a

matter of gaining new customers but we have clearly proven above that

the retaining of existing customers is important. Satisfying existingcustomers with best services will increase their loyalty level towards the

company and the retaining of these customers can be made possible.

Recommendations:-On the basis of our research we recommend that customers must be

given importance and their satisfaction must be the first priority of

Broadband service providers for retaining them on long term basis.



26/30


References:-

Anderson, Eugene W., Mittal, Vikas (2000), "Strengthening theSatisfaction-Profit Chain, Journal of Service Research, 3, 2, 107-120

Gerpott Torsten J., Wolfgang Rams, Andreas Schindler (2001), "Customer

retention, loyalty, and satisfaction in the German mobile cellular

telecommunications market", Telecommunication Policy, 25, 4

(May), 249-269

Hallowell, R. (1996), The relationships of customer satisfaction, customer

loyalty, and profitability: an empirical study, International Journal of

Service Industry Management,7, 4, 27-42

Jia, G., Yan, H., (2005), Empirical analysis on the forming model ofcustomer loyalty: the case study of mobile communication service,

Services Systems and Services Management, Vol. 1, June, 133- 137

Kim, Moon-Koo, Park, Myeong-Cheol, Jeong, Dong-Heon (2004), "The

effects of customer satisfaction and switching barrier on customer

loyalty in Korean mobile telecommunication services",

Telecommunications Policy 28, 145159

Patterson, P.G., Smith, T. (2003), A cross-cultural study of switching

barriers and prosparity to with service providers, Journal of

Retailing, 79, 107-120PTA Annual Reports 2008, Retrieved November 23, 2009, from

http://www.pta.gov.pk/index.php?

option=com_content&task=view&id=361&Itemid=590

Reinartz, W., Kumar , V. (2002), Mismanagement of Customer Loyalty,

Harvard Business Publishing, Jul 01

Wong, Chi-Bo and Mula, Joseph M. (2009), The moderating effect of

switching costs on the customer satisfaction-retention link: retail

internet banking service in Hong Kong, 11th IBIMA Conference:

Innovation and Knowledge Management in Twin Track Economies, 4-6

World Broadband Statistics (2008), Retrieved November 22, 2009, from

http://point-

topic.com/contentDownload/operatorsource/dslreports/world

%20broadband%20statistics%20q4%202008.pdf

http://www.pta.gov.pk/index.php?option=com_content&task=view&id=361&Itemid=590http://www.pta.gov.pk/index.php?option=com_content&task=view&id=361&Itemid=590http://point-topic.com/contentDownload/operatorsource/dslreports/world%20broadband%20statistics%20q4%202008.pdfhttp://point-topic.com/contentDownload/operatorsource/dslreports/world%20broadband%20statistics%20q4%202008.pdfhttp://point-topic.com/contentDownload/operatorsource/dslreports/world%20broadband%20statistics%20q4%202008.pdfhttp://www.pta.gov.pk/index.php?option=com_content&task=view&id=361&Itemid=590http://www.pta.gov.pk/index.php?option=com_content&task=view&id=361&Itemid=590http://point-topic.com/contentDownload/operatorsource/dslreports/world%20broadband%20statistics%20q4%202008.pdfhttp://point-topic.com/contentDownload/operatorsource/dslreports/world%20broadband%20statistics%20q4%202008.pdfhttp://point-topic.com/contentDownload/operatorsource/dslreports/world%20broadband%20statistics%20q4%202008.pdf


27/30


Appendix:-Broadband Survey Questionnaire:-

Dear Sir/Madam, we are a group of final year students from University of

Central Punjab undertaking a research study on Broadband services.

You are invited to participate in our survey only for academic purpose. It

will take few minutes to complete the questionnaire. Your participation in

this study is completely voluntary. It is very important for us to learn youropinions.

1) Age ________

2) Gender

Male

Female

3) Occupation

Student

Professional

Business

Other

4) I am using following broadband services. (More than 1 option can be

selected)

BrainNet / BrainTel

CyberNet /CyberXtreme

LinkDotNet

PTCL DSL Broadband

PTCL EVO Wireless Broadband

Wateen DSL



28/30


Wateen Wireless WiMax

Wi-Tribe WiMax

WorldCall EVDO Wireless Broadband

WorldCall Cable Broadband

Other__________________



29/30


Please mark in the relevant following boxes:

Strongly

Disagree

Disagree

Neut

ral

Agree

Strongly

Agree

1. My broadband service connectivity is good.

2. My broadband service speed is stable.

3. I do not have to wait long to talk to the Customer

Representative.4. The Customer Representatives of the company at are

very polite and courteous.5. I am satisfied with the signal reception of my

broadband device.6. I find my Device Software very easy to install.

7. I do not find much difference in the rates of other

Broadband service providers.8. The tariff schedule of my service provider is clear and

easy to understand.9. I find my payment mode to be easy.

10. I can easily and quickly change my Broadband

package.11. I consider the Bandwidth offerings of other service

providers are same as my provider.

12. The technology used by my provider is the sameas being used by other providers now a day.13. I have intentions to switch my broadband internet

connection as soon as I find a better alternative.14. I will not buy an Annual membership of my

internet connection even if discounted package is

offered.15. My service provider always gives value to my

opinions and wants.16. I feel emotionally attached to the brand of my

service provider.



30/30


17. I refer others to buy connection from my service

provider.18.It I would be needing another connection in future I

would not hesitate to repurchase the same brand.19. I am satisfied with the no of Discounts my service

provider offers annually.20. My service provider conducts lucky draws and

gives away prizes.21. My Broadband service provider claims in

advertisements to be most economical.22. My service provider uses prices like Rs.299 or

Rs.1999.

Thank you for your valuable time!

Documents

Rmm Proj Final (2)