Abstract

The study investigated the relationship between service quality and customer loyalty in the Mobile Telecommunication industry in Cameroon.  The research was conducted at the time when the fourth mobile operator was announced which thus provides dissatisfied customers the opportunity to switch to the new networks in search for better mobile services.

The literature  review  revealed  that  although  quality  is  an elusive and indistinct construct which may vary from one person to another or even from one  situation  to  another  it  can  be  assessed  by  probing  whether  perceived service delivery meets, exceeds or fails to meet customer expectations.

The SERVQUAL instrument postulated by Parasuraman, et al., (1985) and by Gronroos C., (1982) was used to measure service quality.  Long term customer loyalty construct was also established relying on studies done by  Lin and Wang (2006). A total of 191 questionnaires were administered out of which 171 valid responses were obtained for the study.

The findings from  the  study revealed  that  service  quality  variables  such  as  Tangibles,  Responsiveness,  Reliability, Assurance, Empathy and real network quality have a positive influence on customer loyalty.  The study  recommends  that  mobile  operators  should  Endeavour  to improve  the  quality  of  mobile  services  offered  to  clients  in  order  to  achieve  brand Loyalty.

GENERAL INTRODUCTION

Living  as  we  do  in  the  second  decade  of  the  twenty  first  century,  good  telecommunication  has  become  an  essential  requirement  to  sustain  high performance  and  quality  of  life.  In  Africa  mobile  telecommunications  has  expanded exponentially  over  the  last  decade  and  will  continue  to  do  so  during  this  decade, Cameroon in particular has experienced a growth of about 34.53% in its mobile teledensity ; 1.53% above continent’s average.

Mobile phones have become the quintessential means of communication, not just for social purposes, but also for work. The process of restructuring Cameroon’s telecommunication sector truly got under way in June 1995, when the authorities decided thoroughly to reform network industry sectors such as water, electricity and telecommunications with a view to creating a favorable environment in which to develop their infrastructure and services and thus to satisfy increasingly exigent demand.

The process took the form of liberalization, State withdrawal from the sectors concerned and the establishment of a market structure enabling Cameroon to remain in step with the especially rapid global developments in the telecommunication sector; indeed, in spite of the investments made, the coverage rate and quality of service offered had remained largely inadequate.

The Cameroon Telecom sector is passing through a dynamic transitional phase, as it is clearly undergoing the operation of market forces of demand and supply. The sovereignty of consumers is quite evident through their revealed preference in favor of economically rational decisions. Therefore, the task facing the managers in telecom sector is to focus on those activities that result in meeting or exceeding customer expectations.

Moreover, the forces of liberalization and globalization of telecommunication market have pressurized the companies to maintain their market share by focusing on retaining their current customer.  They are being increasingly confronted with the challenges to attract their subscribers by providing high quality of services. With the increase in the cost of acquisition of new customers, cellular mobile companies continually seek new ways to acquire retain and increase their subscriber base.  Thus the ability to retain existing customer is increasingly crucial in this industry. This is possible only by providing quality of services to the customers.

Since 1999 that the Cameroon government deregulated its mobile telecom industry and this has led to an intensified competition amongst mobile operators, it is widely believed that this industry deregulation has greatly empowered the customers; who are no longer stuck with the decisions of a single company and has led to exacerbation of the competition, while competitors are only one “click away”, customer empowerment is likely to amplify the attrition rate of a company’s customers.

Facing with this threat, companies should be equipped and armed with the most efficient and effective methods of examining their client’s behavior predicting their possible future failure as well as knowing the customer’s expectation. The mobile telephony market is one of the fastest-growing service segments in telecommunications, and more than 75% of all potential phone calls worldwide can be made through mobile phones and as with any other competitive markets, the mode of competition has shifted from acquisition to retention of customers.

Acquisition and retention of new clients are one of the most significant concerns of business; the mobile telecommunication service industry is no exception to this. Yankee group, (2001), indicated that  mobile operators  approximate  seven  times  higher  cost  of acquiring  new  client  on  retaining  existing  clients  on  an average  basis.  Normally, mobile  operators  in  dynamic technological  environment  find  it  inexpensive  to  retain their  customer  base  rather  than  simulating  strategies  to acquire  them. While recipient companies concentrate on acquiring new customers, mature ones try to focus on retention of the existing ones in order to provide themselves with the opportunity of cross-selling and as such gain competitive advantage (Lin and Wang 2006).

This is strongly backed by the fact that one of the most significant ways of increasing customer’s value is to keep them for longer period of time. Due to the above stated fact, in order to retain customers a general problem is posed; which consist of knowing the factors that essentially influence customer loyalty to a given company? It is as a result of the above stated problem that we deem it necessary to carry out our research on the topic: service quality and customer loyalty in Cameroon mobile telecommunication service industry.

As of 1998, the restructuring process of Cameroon’s telecommunication sector was accelerated, having as its primary preoccupation to successfully supply a universal service defined as « the supply and putting at the disposal of all a basic service, of a required quality, at an affordable price on the entire territory with a particular attention on rural areas and/or far away zones».

About 15 years later, looking at the developments and investments of telecoms in Cameroon, we observed that the goals set by government have only partly been met especially with respect to the development in rural areas and information about the quality of service is still very scanty.

Cameroon’s mobile telecommunication industry is perhaps one of the fastest growing sectors of the economy and there is fierce competition within the sector made up of three telecom operators namely, MTN, CAMTEL and ORANGE. Competition is supposed to bring about efficiency in the quality of service delivery in an economy (Boohene R. and Agyapong Q., 2011).

Despite the  high  number  of  Mobile  Telecommunication  service  providers  in  Cameroon, complaints  from  customers  with  regards  to  their  dissatisfaction  of  provided  services have  increased  in  recent  times.  The dissatisfaction of consumers has been attributed largely to poor quality service delivery by the operators and it is often highlighted in the media and widely discussed among the general public. The country’s telecom watchdog, the telecommunication regulatory board has threatened to crack down on mobile network providers if they fail to tackle the chronic problem of poor quality service.

Mobile telecommunications service companies in Cameroon are advancing technology and exploring new product offerings. As a result, the competition within the market is increasing and intense.  In a competitive market place, retaining old customers is better than attaining new customers.

Moreover, ongoing innovative telecom solutions have grown exponentially from time to time to ensure quality of the mobile telecom services offered to the customers, remains at the competitive level and to create additional differentiation in order to attract new customers while maintaining existing customers. As from consumer perspective, the cellular services have provided an alternative way of life and this has increase the widespread of the adoption of mobile telecommunication in Cameroon.

Despite its attractiveness, mobile loyalty among mobile telecom subscribers has become an issue as there are many operators which offer mobile telecom services in Cameroon market. It has to be aware that customer loyalty is important because it has a positive effect on long-term profitability since a firm can develop long  lasting,  jointly  profitable  associations  with customer by  developing  customer  loyalty  (Pan, Sheng & Xie,  2011).

According to Reichheld et al. (2000), the high costs of acquiring new mobile customers can lead to unprofitable customer relationships for up to three years. As a consequence, it is crucial for mobile telecom companies to create a loyal customer base, as well as to monitor the profitability of each segment.

However, few companies seem to succeed in creating mobile network loyalty, and little is known about the mechanisms involved in generating customer loyalty on the mobile telecom. Available literature seems to suggest that there is no consensus among researchers regarding the main factors underpinning customer loyalty.

Whereas Brady and Cronin, (2001) , found that high degree of service quality translates into loyalty, Aydin and Ozer, (2005), are of a contrary opinion. They are of the view that service quality is a necessary but not sufficient condition to obtain customer loyalty (Aydin S. and Ozer. G., 2004, p. 913).  Though loyalty is crucial, much of the research done on consumer in the mobile telecom context has been focusing on satisfaction.

In  such  a  competitive  market,  a  big  question  is  “how  to create  new  mobile  telecommunications  service  business models  in  the  middle  of  development  of  smart-phones (multi-SIM card phones or hybrid phones)?” How could firms survive in such competitive markets? In the  past,  customers  were  provided  with  financial  incentives  to  sign  up  or  switch  service  from  one  provider  to another.

Over time, with the increased market saturation, companies  have  realized  that  their  performance  can  be improved  by  focusing  more  on  retaining  customers  than attaining  new  customers.  As the market provides an increasing range of opportunities for customers, this research  aims  to  answer  the  question  “how  can  mobile telecommunications  service  providers  create  and maintain  customer  loyalty?”

Main Research Question

Our main research question is: how can perceived service quality influences long term customer loyalty towards cellular operator in the mobile telecommunication service industry of Cameroon?

Specific Research Questions

This main research question or problem is sub-divided in to the following research questions:

1. What is the incidence of functional quality on long term customer loyalty towards mobile telephony services in Cameroon?
2. What is the relationship between technical quality and long term customer loyalty among Cameroonian cellular service subscribers?

In trying to provide answers to our research questions, we had to set some objectives to guide us in the study; beginning with the main question, thus: to find out how perceived service quality influences long term customer loyalty towards services provided by the cellular companies in Cameroon.

Objectives of the Study

The secondary objectives were:

1. To evaluate the incidence of functional quality on long term customer loyalty towards mobile networks in Cameroon.
2. To bring out the relationship between technical quality and long term customer loyalty among Cameroonian cellular service subscribers.

The majority of research indicates that service quality affects customer loyalty only through customer satisfaction. (Example, Anderson and Sullivan, 1993; Patterson and Spreng, 1997; Brown et al., 1994). However, some studies suggest that service quality might also have a direct impact on customer loyalty (Aydin and Ozer, 2005). Taylor (1992) hypothesize that perceived service quality positively affects customer loyalty. Interestingly, their empirical results show that perceived service quality positively affects loyalty only through customer satisfaction. That is, the effect of perceived service quality on loyalty appeared to be indirect.

Recently, Cronin et al., (2000) pointed out that both the direct and indirect effects of service quality on customer loyalty should be considered. In their examination of six different service industries, they found that in four cases, service quality directly and positively affected customer loyalty. Both direct and indirect influences of service quality on loyalty were also found in a study comparing banking services in the U.S and New Zealand (Varki and Colgate, 2001). These findings help to draw the general hypothesis as follows: Service quality directly and positively influences long term customer loyalty among Cameroonian cellular service subscribers.

Hypothesis

H1: Functional quality positively influences long term customer loyalty among Cameroonian cellular service subscribers.

H2: Customers’ perceived technical quality positively affect their long term loyalty.

The revelations of this study are hoped to be of particular assistance to the management of Cameroon’s mobile telecom networks to better elaborate strategies aimed at retaining their customers thus increase their commercial performance. Our recommendations shall help mobile operators to enhance their profitability by maintaining and retaining long term profitable customers.

The methodology used in this work is experimental, based on the verification of hypotheses. This study aims at bringing the incidence of quality service on customer loyalty towards mobile cellular operators and the approach used is the quantitative approach.

Our population was constituted of pre-paid mobile subscribers and the sub population made up of student’s pre-paid mobile subscribers in the University of Bamenda precisely ENSET Bamenda. As source of data collection, we will use primary and secondary sources. Primary data will be collected through the use of questionnaire mean while secondary data will be collected through documentary study and information from the internet. In other to analyze our primary data, we will use the SPSS software.

Our work is divided into two main parts. Part one is aimed at bringing out the theoretical conception of service quality and customer loyalty as well as their determinants. Whereas, part two’s objective is to present the mobiles telecommunication service industry in Cameroon, the research methodology, analysis of collected data and interpretation of results. It lastly presents managerial implications of our findings in which we try to give some proposals to cellular network operators that can improve their level of customer loyalty and reduced the rate of customer attrition towards their service network.