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 been
Bhatti, 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 increase
ICE-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
social influence and hedonic motivation are
contextualised in the area of the mobile service.
Therefore, marketing concepts help in supporting the
argument and shaping the theoretical underpinning
for this research framework. Each theory in this
framework is covering one phenomenon of each
aspect i.e. marketing mix and product association,
behavioural aspect covered by UTAUT 2, and
psychological aspect such as customer experience
and customer satisfaction are underpinned by
customer expectation confirmation theory (ECT).
This research project aims to explore the factors
that affect customer loyalty in the telecommunication
sector of Australia. The main objective of this study
is to develop a framework to investigate the factors
affecting customer loyalty in the telecommunication
service industry. To achieve this objective, several
questions have been formulated, as follows:
1- What are the factors that influence the customer
loyalty in the Australian telecommunication sector?
2- To what extent do these factors affect customer
loyalty?
3- What is the influence of age, gender and length of
experience as a moderating factor between
antecedents and dependent variable in the extended
Unified Theory of Acceptance and Use of
Technology model?
In order to address the research questions, the
following specific objectives are formulated.
Aims
This study will explore the factors which can
affect customer loyalty.
This study framework will be used by
telecommunication business managers and
business units in formulating their business plans
for sustainable revenue.
This study framework will help the companies in
improving their customer base.
This study framework will significantly
contribute by empirically testing a new model for
customer repurchase behaviour.
Objectives
To determine the significance of these factors on
customer loyalty.
To investigate the determinants of repurchase
behaviour in the Australian telecommunication
sector.
2.1 Research Framework
The model is amended to suit the context of this stu-
dy. The UTAUT 2 model also fulfils the requirement
of marketing mix factors such as product, price, plan,
place, process and promotion for this study. This
model also supports the influence of social influence
through social networking using marketing and
advertising tools for the promotion of product and
services. The revised model will also consider the
influence of moderators that are thought would
influence the three direct determinants: gender, age
and the length of experience.
Figure 1: Loyalty Framework (UTAUT 2 Extension).
The above discussion would lead to the following
hypothesis:
H1: Facilitating conditions has a positive impact on
customer loyalty.
H2: Effort expectancy has a positive impact on
customer loyalty.
H3: Performance expectancy has a positive impact on
customer loyalty.
H4: Social influence has a positive impact on
customer loyalty.
H5: Price value has a positive impact on customer
loyalty.
H6: Habit has a positive impact on customer loyalty.
H7: Hedonic Motivation has a positive impact on
customer loyalty.
H8: Customer satisfaction has a positive impact on
customer loyalty.
H9: Customer experience has a positive impact on
customer loyalty.
H10: Customer experience has a positive impact on
customer satisfaction.
H11: Facilitating conditions has a positive impact on
customer loyalty.
H12-H21: The moderating impact of age, gender and
length of experience on above mentioned
relationships between independent and dependent
variables.
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3 RESEARCH METHODOLOGY
This research is based on positivist paradigm with
quantitative method. It is based on hypothetico-
deductive quantitative approach. The positivist
methodology is based on the experiments, hypothesis
testing, validity, verifications and quantitative
methods of study. The interpretive approach
considers reality as a relative term; it focuses on
subjectivity of social issue with interpretative
dialectical method (Bryman and Bell, 2011). This
study investigates the relationship between customer
loyalty, customer satisfaction, customer experience
and its measure, hedonic motivation, habit, marketing
mix factors such as product price value, facilitating
conditions in the context of customer loyalty in
mobile telecommunication industry using UTAUT.
Research questions are derived from a literature
review. This research focuses on all the impacts,
whether technical or behavioural, which can
influence customer loyalty. Quantitative method of
study is adopted for this research. In this study, in
order to achieve the research objective, a quantitative
method is employed by utilizing an online
questionnaire. In this study, the participants are
recruited from all the states in Australia by using the
marketing company’s Research Now panel. It
strengthens the result that can be obtained from a
certain population. Thus, the costs of distributing,
collecting and capturing questionnaires can be small
(Sanchez-Acenjo, 2014). Brand (2003) explained that
sometimes this method can be costly and time
consuming. This method can provide a narrative
which offers better and meaningful understanding of
behaviours (VanderStoep and Johnson, 2008).
However, the results of analysis can be interpretative
and can introduce potential bias while data gathering
or during data analysis (Brand, 2003). The survey is
done in three phases as mentioned below.
Survey 1: Pre-test
The primary aim of the pre-test is to test and validate
the various scales that are used for the final test of
model. Survey 1 is conducted from participation of
five academics and five content experts. Item
screening is also conducted in this step using the
interrater reliability.
Survey 2: Pilot Test
The primary aim of the pilot test is to examine the
responses of complete questionnaire and validate
various scales that are used for the final test of model.
This test also helps to test that participant can
understand wording, grammar and context of the
study. At this stage, participant’s feedback can be
incorporated in the actual study. Survey 2 is
conducted from a participation of 10-15 mobile
service users in Australia.
Survey 3: Main Study
In the main study people living in Australia are
invited to participate by using a marketing company
Research Now. The target population for the main
study is approximately 2000, with an expected
response 364 participants (Uma and Roger, 2003).
For data analysis envisaged in this study, a minimum
sample size of 320 is desirable. Data is analysed using
Structural Equation Modelling with R- Studio. The
finalised item for the research instruments for each
construct are as follow in Table 2.
Table 2: Research Instrument.
Variables No. item Source
Facilitating
Conditions
7
(Boontarig et al., 2012; Venkatesh et
al., 2012)
Performance
Expectancy
6
(Boontarig et al.. 2012; Shao and
Siponen, 2011; Venkatesh et al..
2012)
Effort
Expectancy
7
(Hung and Chang. 2005; San Martín
and Herrero. 2012; Venkatesh et al..
2012)
Social
Influence
6
(Venkatesh et al.. 2003; Venkatesh
et al.. 2012)
Hedonic
Motivation
7
(Chang et al.. 2009; Venkatesh et al..
2012)
Habit 6
(Lin and Wang. 2006; Venkatesh et
al.. 2012)
Price Value 5
(Baker et al.. 2000; Venkatesh et al.,
2012)
Customer
Satisfaction
6
(Wang et al., 2004; Zhou and Lu,
2011)
Customer
Experience
9
(Wang et al., 2004; Wangpipatwong
et al., 2008)
Customer
Loyalty
5
(Chang et al., 2009; Kuo and Yen,
2009; Ray and Chiagouris, 2009;
Zhou and Lu, 2011)
Total 64
4 DATA ANALYSIS
There were 364 respondents to questionnaire survey
after data cleaning i.e. removal of unengaged
responses. There are 184 (50.5 percent) of them male
and 180 (49.5 percent) female in this study.
The respondents are in age range of 18-25 (15.1
percent), 26-35(18.1 percent), 36-45(17.6 percent),
46-55(17 percent), 56-64(16.2 percent) and >65 (15.9
percent). The majority of respondents are with annual
income $18200-$37000 (20 percent) and minority of
respondents with the annual income $180000 and
over in the above-mentioned figure.
The Analysis of Antecedents of Customer Loyalty in the Australian Mobile Telecommunication Market
95
The respondent’s employment status is described
in this survey as self-employed (7.1 percent),
employed (54.9 percent), unemployed (7.4 percent),
volunteer (1.1 percent), student (6.3 percent), retired
(20.1 percent) and unable to work (3 percent). The
majority of respondents are holders of bachelor
degree, diploma or associate diploma and high school
graduate. The minority of respondents are holders of
certificate IV or below (14 percent) and 0.8 percent
never attended school.
4.1 Evaluation of the Measurement
Model
The measurement model (confirmation factor
analysis or CFA) specifies the relationships that
explain how measured variables represents a
construct (Hair, 2010). It was assessed with CFA
using R-studio programming tool to empirical test the
convergent and discriminant validity. In the
confirmation factor analysis, the convergent and
discriminant validity depend upon three indicators
such as the item reliability of each measure, reliability
of the construct, and average variance extracted
(AVE). According to Hair (2010), constructs have
convergent validity when the composite reliability
(CR) exceeds the threshold of 0.70 and the average
variance extracted (AVE) is above the threshold value
of 0.5. The below mentioned table 3 shows that all
items have item loading higher than 0.7 except few
items such as one item from facilitating condition FC-
3, one item from habit HT4, three items from
customer service and one item from customer
satisfaction (CS-6). These items are dropped. All the
AVE’s after removal of these items were above 0.5
and all the CRs were above 0.7. Hence, the results
support the convergent validity of the scales (Straub
et al., 2004). Below mentioned table 3 shows the CR
and AVE values.
Table 3: Construct Validity and Discriminant Validity.
Constructs CR
a
AVE
b
Customer Satisfaction (CS) 0.939 0.721
Performance Expectancy (PE) 0.944 0.737
Habit (HT) 0.793 0.491
Customer Experience (CE) 0.909 0.626
Price Value (PV) 0.916 0.732
Social Influence (SI) 0.939 0.721
Customer Loyalty (CL) 0.874 0.582
Facilitating Conditions (FC) 0.879 0.721
Hedonic Motivation (HM) 0.901 0.605
Effort Expectancy (EE) 0.91 0.593
For the model, measurement model fits
parameters which helps to assess the models’
goodness of fit index and other parameters such as
Chi-square (χ
2
),
CFI, TLI, RMSEA, and SRMR. As
per below mentioned references, the overall model fit
well. Therefore Table 3 shows the measurement
model parameters and m in the below mentioned table
4 represents the number of items.
Table 4: Measurement Model Parameters.
Fit Indices Value Reference Range m>=30
GOF
Chi-Square
1.69 (Hair et al., 2010) P<3.
RMSEA 0.02 (Hair et al., 2010) Values<0.07
CFI 0.979 (Hair et al., 2010) Above 0.90
TLI 0.967 (Hair et al., 2010) Above 0.90
SRMR 0.037 (Hair et al., 2010) 0.08 or less
The next step after confirmatory factor analysis is
the assessment of the structural path model and then
hypothesis testing. This paper is only focusing on the
measurement model fit. So, the next part of the
analysis will be hypothesis testing.
5 CONCLUSIONS
The purpose of this study was to investigate the
factors affecting the customer loyalty and the use of
mobile services in Australia. The findings of this
study have explored interesting findings. First, it
confirms that model is reliable and valid for further
analysis. Second, with respect to the extended version
of UTAUT 2 model, the model fit relatively well as
all parameters are in adequate acceptable range. The
results of measurement models show that model fits
quite well. The next step is to test the structural model
followed by hypothesis testing. This research helps in
the designing of the theoretical framework with the
underpinned theories and concepts. This research
model is the extension of user behaviour and adoption
theories. In this research, model is based on different
assumptions which are discussed in theory building
process and how these assumptions help in the
research framework development. This model
contributes theoretically in better understanding
behavioural intention and customer loyalty
framework in telecommunication context.
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96
6 FUTURE STUDIES AND
LIMITATION
This model can be tested in other service industries
such as airline, energy and cloud computing research
etc. This model can be tested with some other
geographical samples in other countries. Moreover,
this study is based on the quantitative data analysis as
data was collected from 1,985 respondents with 364
valid responses, so this work could be extended using
qualitative data analysis technique. Companies can be
approached after ethics approval and interview could
be conducted in future studies. There was a limitation
in this study that company database access was not
available for net promoter score (NPS) quarterly
analysis for each mobile service. In future research,
companies’ customer database can be used for further
analysis which can lead to the development of some
mathematical and predictive model for big data
analytics. Thus, future research can be built on this
model of the UTAUT 2 extended model in different
countries and different service areas.
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