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International Journal of Sales & Marketing Management Research and Development (IJSMMRD) ISSN 2249-6939 Vol.

3, Issue 2, Jun 2013, 87-94 TJPRC Pvt. Ltd.

MEERA ARORA Research Scholar, Singhania University, Rajasthan, India

Technological and economical development has forced companies in competitive markets, to change their strategic focus, as a result of which the Customer oriented organization is on the rise. In order to stay ahead of the competition, companies are increasingly turning to their customers as a means of securing their future competitive edge. CRM has become the mantra for success and developing close relationship with customer has become most important in this current era of intense competition and demanding customers, than has ever been. Times are tough for telecom service providers also as the telecom industry is experiencing a transformation from being a monopoly market to a competitive market. With privatization, liberalization and subsequent demonopolization the scene has changed in Indian telecom industry and the most excited are the customers who are emerging as kings in the market. Fuelled by this dramatic increase in competitive pressure, the telecom players are required to design and deploy customer- centric strategies not only to grab the share but also sustain the share in the long run. The players have realized the importance of constant service quality delivery to the customers for long term sustainability. The study seeks to examine the role of service quality in developing long term relationship with customers. The data has been collected from 262 mobile users of Indian Telecom industry. The analysis has been done on the basis of Mean, Standard-Deviation, Correlation and Regression.

KEYWORDS: Service Quality, Customer Loyalty, Customer Relationship Management, Indian Telecom Industry INTRODUCTION
Telecommunication is one of the prime support services needed for rapid growth of any developing economy and is one of the fastest developing sectors in India. Telecommunication sector in India can be divided into two segments: Fixed service providers and Cellular service providers. Fixed line services consist of basic services like national or domestic long distance and international long distance services. Cellular services can be further divided into two categories: global system for mobile communication (GSM) and Code division multiple access (CDMA). The GSM sector is dominated by Airtel, Vodafone and Idea Cellular, while CDMA sector is dominated by Reliance and Tata Indicom. A decade ago, India was at the bottom of the pyramid in the world telecom market. But After opening of the telecom sector for competition, through liberalization, disinvestments, privatization and demonopolization initiatives adopted by the government of India, the industry, especially the mobile segment is experiencing a tremendous growth and today we are the second largest telecom market in the world. The number of telephone connections was 892.02 million at the end of march 2013, as compared to 41 million at the end of December 2001. The overall tele-density in India has


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reached 72.90% The urban tele-density is 146.15% and rural tele-density is 40.81%. The composition of the telecom sector too has witnessed a structural change, with the private sector accounting for 88 % of the total connections.


The need-of-the-hour is relation-based differentiation. Thus Customer relationship management (CRM) is emerging as a critical strategy, since relationships are coming to the forefront of competitive battlefield. Successful CRM is about competing on the relationship dimension-not as an alternate of having a competitive product or reasonable price- but as a differentiator. It a business strategy to acquire, grow and retain profitable customer relationships, with the goal of creating a sustainable competitive advantage. CRM aims at narrowing the gap between the company and its customers, thus enabling companies to identify the changing behavior pattern of customers so that proactive strategies can be formulated. With telecom industry nearing maturity, showing saturated growth, efficient CRM substitute is essential, since customer attrition is high due to presence of close substitutes and near-zero switching costs and service providers are trying to attract customers from competitors by giving attractive offers. All this is making the switch-over process happen at the speed of thought. CRM is thus evolving as an important tool not only to sustain the market share, build relationships but also to retain it. While at one end telecom service providers are wooing the customers through tailor-made marketing strategies and roping them in with utmost flamboyance, at the other end, retaining the customers for survival has become a focal point, which service providers are concentrating on Customer relationship management (CRM) is rapidly becoming an integral part of many organizations. Successful implementation of CRM requires a strategic approach which involves developing customer centric processes, selecting and implementing technology solution, customer information and knowledge generation capabilities to differentiate them and ability to learn from best practices.

Globalization and deregulation, combined with advances in information technology, have radically changed the managerial context of service industries. Though the origin of customer relationship management was initially in the industrial context, the service industry is also focused on maintaining and enhancing customer relationships. Services are produced and delivered by the same institutions. Success of a service provider is dependent on long term relationships that develop between the provider and customer. Service industry depends on continuous cycle of repurchase so retention of customers requires hard efforts by organizations Anderson et al., (1994) Berry (1983) stresses that the attraction of new customers should be viewed only as intermediate step in the marketing process. Solidifying the relationship, transforming indifferent customers into loyal ones and serving customers as clients should also be considered as marketing. He has outlined five strategy elements for practicing customer relationship management: developing a core service around which to build a customer relationship, customizing the relationship to the individual customer, augmenting the core service with extra benefits, pricing services to encourage customer loyalty and marketing to employees so that they, in turn, will perform well for customers. Agrawal (2001) emphasizes that service marketers need to build up long-term relationship with their customers by understanding the cause behind their problem and recovering them fast to build deeper and long term relationships. Further he strengthened the marketing principle, focusing on the repeat customers, which cost less in comparison to attract new ones. He studied the change in customers attitude after solving their complaints.

Role of Service Quality in Customer Relationship Management: An Empirical Study of Indian Telecom Industry


Parasuraman et al. (1988) define quality is the overall experience which a customer perceives through interacting a product and services. They further propose that there are five specific dimensions of service quality: tangibles, reliability, responsiveness, assurance and empathy (Bolton and Drew, 1991; Cronin Jr. and Taylor, 1992; Parasuraman et al. 1988; Shepherd, 1999) describe Service quality as a form of attitude, related but not equivalent to satisfaction that results from the comparison of expectations with performance According to Bitner & Hubert (1994), Tsoukatos & Rand (2006), Service quality is viewed as impression of the customer about the relative inferiority/superiority of a service provider and its services . Bose and Bansal in their article focus on issues and strategies concerning service organizations for profitable acquisition of their lost customer segments. Based on the analysis it is concluded that service quality, relationship building and overall service satisfaction can improve business relations with customers. Because of growing competition in service sector, customer satisfaction is becoming increasingly important and organizations need to develop innovative strategies to retain their existing customers, acquire new ones and at the same time must initiate procedures to win back lost customers. The article points out at three relevant strategies; customization, differentiation and WoW syndrome to regain lost customers. Thurau and Klee (1997) in their study recommend a three-dimensional model of relationship quality. The first of these is customers perceptions of product or service quality. The second hinges on customers trust in the companys ability and willingness to achieve excellence in execution. And the third rests on customers commitment to the relationship. The perception of quality is an antecedent of trust and commitment. These authors argue that relationship quality is the main determinant of customer retention.

Bansal and Gupta (2001) propose that building customer loyalty is not a choice any longer with busines ses: its the only way of building sustainable competitive advantage. Building loyalty with key customers has become a core marketing objective shared by key players in all industries catering to business customers. Kandampully (1998) says that Service loyalty of firms leads to loyal customers. He further found that loyal services offered to customers fulfills both present and future needs of customers.Customers loyalty and trust is gained by service provider s commitment to provision of services, quality of services. Barnes (1997) emphasize that loyal customer would keep recommending to others which helps the organization to earn more customers. Thomson (2004) suggests that competitive markets where customers have a choice between similar products and pricing, 70% of the customer decision making is based on how customers are treated, thus CRM helps in creating loyal bond with the customers. Loyal attitudes and behavior are driven by customers perception of value, which is an amalgamation of what customers receives; how its sold, delivered, and supported; and how much it costs. Value is created every time a customer is made to feel welcome, important and valued. Subramanyam (1998) in his study analyzes that the corporate growth is highly dependent upon the customer network and relationships maintained with them. Customer loyalty has always been valuable, but today it has become


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more vital for success. CRM provides an integrated view of a company customer to everyone in the organization, and thus ensuring that everyone in the enterprise is focused on the customer. He has tried to establish the relationship among the various factors like Companys ability to quickly identify, contact, attract and acquire new customer, understanding of the customers their wants and needs, appropriate product and service offering and match it to the customers unique needs, companys sales cycle, cross-selling and up-selling opportunities, relation of existing customers through after sales service and support. (Fornell et al., 1996; Brady and Robertson, 2001 ) advocate that Customer loyalty can be gained by increasing the customer satisfaction through raising the offered service quality.

Chadha & Kapoor (2009) in their study explore the effect of switching cost, service quality and customer satisfaction on customer loyalty of cellular service providers in Indian market and find a positive relationship between the switching cost and customer perceived service quality, customer satisfaction and customer loyalty. It has been revealed that the customer satisfaction is the most significant predictor of the customer loyalty. Switching cost and service quality also affect the customer intention to stay with particular service provider. Thus service providers should maximize service quality and customer satisfaction by concentrating their efforts on improving network quality, pricing and value added services. Daadlani et al. (2010) discuss the benefits of implementing a CRM system in cellular telecom services and analyze that CRM focuses on automating and improving the business processes associated with managing customer relationships within the areas of sales, marketing, customer care and support. CRM applications not only facilitate the coordination of multiple business functions but also coordinate multiple channels of communication with customers-face to face, call centre and the web- so that organizations can accommodate their preferred channels of interaction. A rich customer relationship fuels effective acquisition, nurturing and retention of customers.CRM aims to provide organizational effectiveness by reducing sales cycles and selling costs, identifying markets and channels for expansion, and improving customer value, satisfaction, profitability and retention. Ling and Run (2009) in their study examine the factors that influence customer satisfaction and customer loyalty in telecommunication services. The findings of the study indicate that factors with significant impact on customer satisfaction are: promotion, cost efficient plans, free services, technology factors, line quality, convenience and handiness, while factors affecting customer loyalty are service quality, subscription status, promotion and inconvenience in switching phone number. Pathak and Rastogi (2007) state that churn in Indian telecom is among the highest in growing telecom markets. The future churn is dependent on satisfaction level of the customer with the service provider, attitude , and loyalty of the customer. Iqbal et al. (2008) affirm that satisfied customers of telecom sector have high extent of usage and intentions to repurchase in future. Greater the level of satisfaction of customers greater will be repurchase chances of customers Haridasan & Venkatesh (2011) propose that CRM requires organizational and business level approaches which are customer centric to doing business rather than a simple marketing strategy. CRM involves all of the corporate functions (marketing, manufacturing, customer services, field sales, and field service) required to contact customers directly or indirectly.

Role of Service Quality in Customer Relationship Management: An Empirical Study of Indian Telecom Industry


The following are the objectives of the present study: To study the customers perception towards quality of services To establish a relationship between service quality and customer loyalty


The study is carried out through the convenient random sampling method based on 262 mobile customers of telecom industry.

Higher the score on customer service quality, higher is the customer loyalty.

Table 1: Mean and S. D of Service Quality Variables of the Service Providers Service Quality Statements TANGIBLES Communication material and tools associated with the company are visually appealing Employees have neat and professional appearance RELIABILITY Your service provider provides services as promised Your service provider shows great concern for solving the customer complaints Your service provider provides the service right the first time Your service provider performs the service at the agreed time Your service provider maintains error free records RESPONSIVENESS Employees tell the exact time of service delivery Employees give prompt service to the customers Employees are always willing to help the customers Employees are never too busy to help the customers immediately ASSURANCE The behavior of the employees instills confidence in customers Employees are consistently courteous Employees have the knowledge to answer customer queries Customers feel confident while interacting with employees EMPATHY Employees have customers best interest at heart Employees understand the needs of the customers Your service provider has convenient business hours Employees pay personal attention to each customer Mean 3.39 3.64 3.35 3.38 3.18 3.24 3.37 3.28 3.44 3.46 3.27 3.52 3.62 3.59 3.69 2.98 3.28 3.50 3.11 Standard Deviation 0.684 0.588 0.853 0.896 0.888 0.906 0.937 0.89 0.868 0.847 0.870 0.847 0.742 0.777 0.712 0.941 0.960 0.870 0.873

Table 1 explains the overall mean and standard deviation of various service quality variables of the service providers. It is quite evident that customers have shown agreement towards majority of the statements concerning service quality (mean value being more than 3.0 in all the statements). However the customers are neutral (mean value 2.98) towards the statement that Employees have customers best interest at heart. The value of Standard Deviation is less than 1.0 in all statements, which indicates that perception of customers towards this issue do not differ across various service providers.


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Hypothesis 1 (H01): Higher the Score on Customer Service Quality, Higher is the Customer Loyalty The null hypothesis Higher the score on customer service quality, higher is the customer loyalty (H01) has been tested using multiple regression analysis. Table 2: Measurement Variables Service Quality Tangibles Reliability Responsiveness Assurance Empathy Customer Loyalty Are you planning to change your service provider Would you recommend your service providers to others

Service quality has been measured on the five dimensions of SERVQUAL instrument (Parasuram et al., 1988), using a five point likert scale (Strongly Disagree= 1 and Strongly Agree =5), while customers loyalty has been studied on two dimensions namely customers response towards mobile number portability and advocacy. Reliability Analysis Table 3: Cronbach Alpha Coefficient S.No 1 1.1 1.2 1.3 1.4 1.5 2 Name of the Variable Service quality Tangibles Reliability Responsiveness Assurance Empathy Loyalty Cronbach Alpha 0.932 0.620 0.816 0.784 0.820 0.830 0.616

Reliability analysis of the variables has been done by computing the coefficient of cronbach Alpha (Table 3), which measures the internal consistency of the items. If the value of coefficient of cronbach Alpha is above 6.0, it is considered to be reliable. As per the table 3, all Alpha coefficient values range from 0.60 to 0.93, thus signifying good consistency among variables within each dimension. Table 4: Mean and Standard Deviation of Customer Loyalty and Quality Variables S No 1 2 3 4 5 6 Variable Customer Loyalty Reliability Tangibles Responsiveness Assurance Empathy Mean 3.37 3.299 3.494 3.363 3.595 3.213 Std Deviation 1.052 0.659 0.5732 0.6751 0.6061 0.7320

Table 5: Correlation between Service Quality and Customer Loyalty Correlation Reliability Tangibles Responsiveness Customer loyalty 0.653(.000)** 0.432(.000)** 0.637(.000)** Note: ** correlation is significant at 0.01 level (two-tailed) Assurance 0.595(.000)** Empathy 0.597(.000)*

Role of Service Quality in Customer Relationship Management: An Empirical Study of Indian Telecom Industry


Pearson correlation has also been computed to test the formulated hypothesis. The results shown in table 5 indicate that all the variables show significant relationship with loyalty with 0.01 level of significance. The variables of Service Quality are positively correlated with Customer loyalty. Further Reliability(r=0.653) has moderately high correlation while Tangibles (r=0.432) has moderately low correlation with customer loyalty. Table 6: Regression Model Summary Model 1 R 0.708 R Square 0.591 Adjusted R Square 0.501 Std. Error of the Estimate 0.532 Durbin-Watson 1.748

Table 7: Regression Analysis: Customer Loyalty Coefficients Un-Standardized Coefficients Beta Std. Error -0.795 0.129 0.333 0.015 0.1135 0.098 0.302 0.021 0.303 0.071 0.276 0.096 Standardized Coefficients Beta 0.546 0.073 0.305 0.397 0.192 Significance Level 000 0.004 0.172 0.003 0.010 0.004

Variable Constant Reliability Tangibles Responsiveness Assurance Empathy

t-Value -2.529 2.886 1.369 2.501 2.591 2.884

The results of regression relationship between Customer Loyalty and Service Quality presented in table 6 indicate high proportion of explained variance as the values of R square (.591) and adjusted R square (.501) are found to be statistically significant. Further standarised coefficient of beta of multiple regression analysis (Table 7) indicate that among the quality variables, Reliability best predicts Customer Loyalty followed by Assurance and Responsiveness. The least predictor of Customer loyalty is Tangibles.

With growing competition and increasing cost of acquisition of new customers, telecom service providers are continually seeking new ways to acquire, retain and increase their subscriber base and are confronted with the challenges of providing high quality of services in order to attract and maintain their customers. On the basis of this study it has been affirmed that service quality affects the customer intention to stay with a particular service provider. Thus service providers should maximize service quality in order to enhance customer loyalty.

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