THE EFFECT OF SERVICE QUALITY ON CUSTOMER SATISFACTION: THE CASE OF ETHIO TELECOM POINTS OF SALES
Abstract
The main purpose of this descriptive and causal study is to investigate the effect of service quality dimensions on customer satisfaction. In addition it tries to measure customer satisfaction and the quality of service offered by ethio telecom points of sales. The five dimensions of SERVPERF model were used to measure the quality of service offered by ethio telecom points of sales. In order to answer raised research questions, both primary and secondary sources of data were used. The primary data were collected through administrating questionnaire. Non probabilistic sampling procedure with a combination of purposive and convenient sampling method was used to obtain 324 responses from customer of ethio telecom who visited ethio telecom points of sales recently. Correlation was used to investigate the relationship between dependent and independent variables. Regarding the satisfaction level measurement, 37.38% of respondents are satisfied and 6.54% are highly satisfied with the service provided at ethio telecom points of sales. And the level of services quality based on the customer perception indicate that the tangibility dimension of service quality is superior to other dimension with a mean score of 3.44 and on the other hand reliability is the least performed dimension with a mean score of 2.93. The correlation results indicate that there is a positive correlation between the dimensions of service quality and customer satisfaction. The research proves that empathy and assurance plays the most important role in customer satisfaction level followed by responsiveness, reliability and finally tangibility.
Key Words: Customer Satisfaction, Service Quality, SERVPER model
CHAPTER ONE
INTERODUCTION
This chapter aims to identify the research problem, the research questions and objectives for carrying out the study. The chapter begins with introductory background information about service quality and customer satisfaction, followed by the statement of problem and research questions and objectives continue respectively. Operational definitions, Significance of the study, with Delimitation and structure of the report ends this chapter.
1.1. Background of the study
Improving Service quality and customer satisfaction has been the major concern of organizations in any industry for many years. In the period of globalization and continues technological advancements, maintaining customer satisfaction is not an option, it is a must to survive the strong competition. An organization that consistently satisfies its customers, enjoy higher retention levels and greater profitability due to increase in customer loyalty (Wicks & Roethlein 2009). The payoff resulted from satisfying customers with improving service quality and other marketing activities is also extensively studied and proven to be true through different marketing researches.
Although many scholars and researchers attempts to explain and measure customer satisfaction, there still does not appear to be a consensus regarding its definition (Giese & Cote 2000). Customer satisfaction is an experience based assessment made by the customer of how far his own expectations about the individual characteristics or the overall functionality of the services obtained from the provider have been fulfilled (Bruhn 2003). According to Gyasi and Azumah (2009) satisfaction is the process of customer overall subjective evaluation of the product/service quality against his/her expectation or desires over a time period. Customer satisfaction can also be defined as a customer‟s overall evaluation of the performance of an offering to date. This overall satisfaction has a strong positive effect on customer loyalty intentions across a wide range of product and service categories (Gustafsson, Johns, & Roos 2005)
There are many factors which determine customer satisfaction level of a specific organization. Service quality in addition to other elements such as product quality, price and others, determine customer satisfaction (Wilson et al. 2008). Many other literatures and studies also supports that service quality has an effect on the level of customer satisfaction. Rust and Oliver (1994) stated that quality is one dimension on which satisfaction is based. According to
Shemwell, Yavas and Bilgin (1998), in today‟s world of intense competition, the key to sustainable competitive advantage lies in delivering high quality service that will in turn result in satisfied customers. When considering the service sector, service quality has been proven to be the best determinant of customer satisfaction. There is also much evidence in the literature to the fact that customer satisfaction is principally driven by service quality of a firm from the perspective of its customers. Bitner, Boom and Mohr (1994) and Anderson, Fornell and Lehmann (1994) also point out the relationship between customer satisfaction and service quality by stating that improved service quality will result in a satisfied customer.
Service quality is the delivery of excellent or superior service relative to customer expectations (Zeithaml and Bitner 1996). Service quality is recognized as a multi-dimensional construct. Many researchers try to identify different dimensions that construct quality of service. Among those the SERVQUAL model constructed by Parasuraman (1988) is most popular. It features five dimensions: tangibles, reliability, responsiveness, empathy and assurance. The tangibles dimension is related to the physical environment aspect of the service provider, the reliability dimension relates to the service outcome aspect and the remaining responsiveness, empathy and assurance represents aspects of interaction quality between the service provider and the customer. SERVPERF model was later extracted from SERVQUAL by Cronin and Taylor in 1992 by focusing only the perception aspect of customers.
Telecommunication service was introduced in Ethiopian by Minelik the second in 1884. The service which started with the installation of telephone lines from Harar to Addis Ababa now consists of different types of services and cover wide area of the country. Ethio telecom is a state owned enterprise and the sole telecom service provider of the country. Since its establishment the company has gone through various structural changes and tries to provide different telecom services.
In telecommunication sector, even though, there are tangible physical product associated to provide service such as customer premise equipment and cable, the major product is intangible in nature and the production and consumption of the final product take place simultaneously (Rajasekhara & Poultry 2010). The whole service provision and consumption process requires an interaction between the service providing company and the consumer. And the interaction starts from the point customers approach to the company in order to purchase products and services for the first time. Ethio telecom Point of sales acts as retail outlets to the company and customers make their first contact to the company through point of sales located in 173 locations across the county.
Majority of service quality and customer satisfaction studies conducted in telecom industry focused on the post purchased service quality and customer satisfaction levels. Studies conducted on ethio telecom service quality and customer satisfaction level also aimed at the post purchase service performance of the company and the related customer satisfaction level. However, like the post purchase service performance and customer satisfaction assessment, the quality of service provided at points of sales and customers‟ satisfaction level on the service they get at the service encounter should get enough study attention.
1.2. Statement of the problem
Ethio telecom‟s points of sales serve as a retail outlet for the company and customers‟ first contact point of sales to purchase required services and products from the company. The number of customers using points of sales increased significantly after the company introduced mobile service and different types of internet services years back. Besides sales activity, renewal of services and replacement of services are provided at point of sales in addition to other tasks. Points of sales also serve as information center to customers in addition to the company‟s expanding call center service.
Since the formation of Ethio telecom in 2010, the company has taken many measures to improve the quality of services and improve customers‟ satisfaction in points of sales. Redesigning and rebranding the physical features of points of sales, automating activities and Designing standard working processes and procedures for services provided in points of sales are among the measures taken to improve the overall performance of the services.
Automation of services and following standard working processes and procedures will help to provide similar services at every point of sales throughout the country for the same request raised by customers. Although standard working processes and procedures are significant, the role of sales representatives in the service provision and ensuring customers‟ satisfaction cannot be undermined because in most cases provision of service involves person to person encounters between the contact employee and the customer. In ethio telecom points of sales this service encounter is between sales representatives of the company and customers.
The interactions or encounters between sales representatives in point of sales and customers are the major component of service quality and customer satisfaction. As Diane and Eduardo (2006) stated, while many factors are important in improving service quality, customer perception of the quality of service is strongly influenced by the social interactions they experience with employees. The behaviors of frontline service employees are critical to customer evaluation of the service encounter (Hartline, Maxham & McKee, 2000). As Amy (2004) stated the contact employee plays an important role in the delivery of service quality as well as the formation of customer satisfaction. In this case sales representatives and other employees in ethio telecom points of sales have an important role in delivering quality service and guarantying customer satisfaction.
Despite efforts undertaken by the company to improve the service quality of its points of sales, there are still customer complaints regarding the sales skill of sales representatives, instability of its system, the way customer complaint is handled, design & comfort of waiting areas and the inconvenient location of point of sales.
This study is primarily observed by the fact that the empirical documentation in the area of customer satisfaction and service quality regarding the country‟s sole telecom service provider, Ethio telecom, are focused on the after sales service performance and customer satisfaction level.
This study mainly focuses on ethio telecom‟s points of sales service performance and level of customers‟ satisfaction with the provided services.
1.3. Research Questions
Based on the identified research problem, the research questions are formulated as follows and the study provide answers for the following major questions:
- What is the level of service quality in ethio telecom points of sales?
- What is the level of customer satisfaction in ethio telecom point of sales?
- Is there a relationship between types of services provided at ethio telecom points of sales and level of customer satisfaction?
- Is there a relationship between service quality dimensions and customer satisfaction in ethio telecom points of sales?
1.4. Objectives of the study
1.4.1 General objective
The main objective of this study to identify effect of service quality dimensions on level customer satisfaction in ethio telecom point of sales.
1.4.2 Specific objectives
- To assess the quality of service provided in ethio telecom point of sales.
- To measure the overall customer satisfaction level with the services provided in ethio telecom point of sales.
- To investigate if there is a relationship between service quality dimensions and customer satisfaction in points of sales services.
- To identify gaps which affect the quality of service in ethio telecom points of sales.
1.5. Definition of Terms
Table 1.1 Definition of Terms
| Term |
Definition |
| Customer Satisfaction |
It is a judgment that a product or service feature, or the product of service itself, provided a pleasurable level of consumption-related fulfillment, including levels of under- or over-fulfillment. (Oliver, 1997). |
| Service Quality |
Service quality is the discrepancy between consumers‟ perceptions of services offered by a particular firm and their expectations about firms offering such services. (Parasuraman, 1985) |
| Service Encounter |
A service encounter is an instance of face-to-face interaction between a server who is „officially posted‟ in some service area, that interacting being oriented to the satisfaction of the customer‟s presumed desire for some service and the server‟s obligation to provide that service (Merritt, 1977). |
| Point of sales |
Point of sales is a place where sales are made. |
| SERVPERF |
SERVPERF is a service quality model which measures service quality by using the perceptions of customers. |
| Tangibility |
Ethio telecom Point of sales overall appearance, employees‟ appearance, completeness and modernity of facilities & equipments in the shop |
| Reliability |
Ability of the ethio telecom point of sales and its sales representatives and other employees to perform the promised service accurately and dependably |
| Responsiveness |
The willingness of sales representatives and other employees in the ethio telecom points of sales to provide prompt service and help customers. |
| Assurance |
The knowledge and courtesy of sales representatives and other employees in the ethio telecom points of sales and their ability to convey trust and confidence on customers |
| Empathy |
The ability of the ethio telecom point of sales and its sales representatives and other employees to provide a carrying and individualized attention to customers and understand customers need |
1.6. Significance of the study
When compared to the long aged telecom service history of Ethiopia, only limited numbers of studies were undertaken up to now in relation to service quality and customer satisfaction with the telecom services. Those studies also mainly focus on the after sales service performance and customer satisfaction level. This study contributes to the knowledge on service quality and customer satisfaction level in ethio telecom points of sales. The study findings also be relevant input to the management of ethio telecom in identifying the existing strength or weakness of service quality delivery and level of customers satisfaction experienced by customers during their visit to the company‟s points of sales.
1.7. Delimitations of the study
The purpose of this study is limited to assess the level of customer satisfaction and quality of services provided in ethio telecom point of sales from the view of customers, who visited ethio telecom‟s points of sales to get different services. Currently the company is taking different measures to improve the quality of service provided in point of sales; however, this study will not assess these efforts of the company in this study.
Geographically, this study is also limited to ethio telecom customers who uses the company‟s points of sales located in the capital city, Addis Ababa.
1.8. Organization of the study
The introduction part of the study is chapter one. Back ground information, problem statement, research questions, objective of the study, operational definitions, significance and delimitation of the study discussed in this chapter.
Chapter two, existing literatures related to service quality and customer satisfaction will be assessed. Ethio telecom‟s brief background information with existing studies related to service quality and customer satisfaction which focused on the company is presented and theoretical frame work on the relationship between customer satisfaction and service quality developed.
The third chapter explains the methodology of the research. The research design and research methods will explained in this chapter starting from how the data collection instrument is prepared to how the collected data is analyzed.
Chapter four discusses the empirical findings and analysis of the study with interpretations. And the last chapter, chapter five, will present conclusion based on the analysis result and recommendations provided by the researcher.
THE EFFECT OF SERVICE QUALITY ON CUSTOMER SATISFACTION: THE CASE OF ETHIO TELECOM POINTS OF SALES
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THE EFFECT OF SERVICE QUALITY ON CUSTOMER SATISFACTION: THE CASE OF ETHIO TELECOM POINTS OF SALES
Abstract
The main purpose of this descriptive and causal study is to investigate the effect of service quality dimensions on customer satisfaction. In addition it tries to measure customer satisfaction and the quality of service offered by ethio telecom points of sales. The five dimensions of SERVPERF model were used to measure the quality of service offered by ethio telecom points of sales. In order to answer raised research questions, both primary and secondary sources of data were used. The primary data were collected through administrating questionnaire. Non probabilistic sampling procedure with a combination of purposive and convenient sampling method was used to obtain 324 responses from customer of ethio telecom who visited ethio telecom points of sales recently. Correlation was used to investigate the relationship between dependent and independent variables. Regarding the satisfaction level measurement, 37.38% of respondents are satisfied and 6.54% are highly satisfied with the service provided at ethio telecom points of sales. And the level of services quality based on the customer perception indicate that the tangibility dimension of service quality is superior to other dimension with a mean score of 3.44 and on the other hand reliability is the least performed dimension with a mean score of 2.93. The correlation results indicate that there is a positive correlation between the dimensions of service quality and customer satisfaction. The research proves that empathy and assurance plays the most important role in customer satisfaction level followed by responsiveness, reliability and finally tangibility.
Key Words: Customer Satisfaction, Service Quality, SERVPER model
CHAPTER ONE
INTERODUCTION
This chapter aims to identify the research problem, the research questions and objectives for carrying out the study. The chapter begins with introductory background information about service quality and customer satisfaction, followed by the statement of problem and research questions and objectives continue respectively. Operational definitions, Significance of the study, with Delimitation and structure of the report ends this chapter.
1.1. Background of the study
Improving Service quality and customer satisfaction has been the major concern of organizations in any industry for many years. In the period of globalization and continues technological advancements, maintaining customer satisfaction is not an option, it is a must to survive the strong competition. An organization that consistently satisfies its customers, enjoy higher retention levels and greater profitability due to increase in customer loyalty (Wicks & Roethlein 2009). The payoff resulted from satisfying customers with improving service quality and other marketing activities is also extensively studied and proven to be true through different marketing researches.
Although many scholars and researchers attempts to explain and measure customer satisfaction, there still does not appear to be a consensus regarding its definition (Giese & Cote 2000). Customer satisfaction is an experience based assessment made by the customer of how far his own expectations about the individual characteristics or the overall functionality of the services obtained from the provider have been fulfilled (Bruhn 2003). According to Gyasi and Azumah (2009) satisfaction is the process of customer overall subjective evaluation of the product/service quality against his/her expectation or desires over a time period. Customer satisfaction can also be defined as a customer‟s overall evaluation of the performance of an offering to date. This overall satisfaction has a strong positive effect on customer loyalty intentions across a wide range of product and service categories (Gustafsson, Johns, & Roos 2005)
There are many factors which determine customer satisfaction level of a specific organization. Service quality in addition to other elements such as product quality, price and others, determine customer satisfaction (Wilson et al. 2008). Many other literatures and studies also supports that service quality has an effect on the level of customer satisfaction. Rust and Oliver (1994) stated that quality is one dimension on which satisfaction is based. According to
Shemwell, Yavas and Bilgin (1998), in today‟s world of intense competition, the key to sustainable competitive advantage lies in delivering high quality service that will in turn result in satisfied customers. When considering the service sector, service quality has been proven to be the best determinant of customer satisfaction. There is also much evidence in the literature to the fact that customer satisfaction is principally driven by service quality of a firm from the perspective of its customers. Bitner, Boom and Mohr (1994) and Anderson, Fornell and Lehmann (1994) also point out the relationship between customer satisfaction and service quality by stating that improved service quality will result in a satisfied customer.
Service quality is the delivery of excellent or superior service relative to customer expectations (Zeithaml and Bitner 1996). Service quality is recognized as a multi-dimensional construct. Many researchers try to identify different dimensions that construct quality of service. Among those the SERVQUAL model constructed by Parasuraman (1988) is most popular. It features five dimensions: tangibles, reliability, responsiveness, empathy and assurance. The tangibles dimension is related to the physical environment aspect of the service provider, the reliability dimension relates to the service outcome aspect and the remaining responsiveness, empathy and assurance represents aspects of interaction quality between the service provider and the customer. SERVPERF model was later extracted from SERVQUAL by Cronin and Taylor in 1992 by focusing only the perception aspect of customers.
Telecommunication service was introduced in Ethiopian by Minelik the second in 1884. The service which started with the installation of telephone lines from Harar to Addis Ababa now consists of different types of services and cover wide area of the country. Ethio telecom is a state owned enterprise and the sole telecom service provider of the country. Since its establishment the company has gone through various structural changes and tries to provide different telecom services.
In telecommunication sector, even though, there are tangible physical product associated to provide service such as customer premise equipment and cable, the major product is intangible in nature and the production and consumption of the final product take place simultaneously (Rajasekhara & Poultry 2010). The whole service provision and consumption process requires an interaction between the service providing company and the consumer. And the interaction starts from the point customers approach to the company in order to purchase products and services for the first time. Ethio telecom Point of sales acts as retail outlets to the company and customers make their first contact to the company through point of sales located in 173 locations across the county.
Majority of service quality and customer satisfaction studies conducted in telecom industry focused on the post purchased service quality and customer satisfaction levels. Studies conducted on ethio telecom service quality and customer satisfaction level also aimed at the post purchase service performance of the company and the related customer satisfaction level. However, like the post purchase service performance and customer satisfaction assessment, the quality of service provided at points of sales and customers‟ satisfaction level on the service they get at the service encounter should get enough study attention.
1.2. Statement of the problem
Ethio telecom‟s points of sales serve as a retail outlet for the company and customers‟ first contact point of sales to purchase required services and products from the company. The number of customers using points of sales increased significantly after the company introduced mobile service and different types of internet services years back. Besides sales activity, renewal of services and replacement of services are provided at point of sales in addition to other tasks. Points of sales also serve as information center to customers in addition to the company‟s expanding call center service.
Since the formation of Ethio telecom in 2010, the company has taken many measures to improve the quality of services and improve customers‟ satisfaction in points of sales. Redesigning and rebranding the physical features of points of sales, automating activities and Designing standard working processes and procedures for services provided in points of sales are among the measures taken to improve the overall performance of the services.
Automation of services and following standard working processes and procedures will help to provide similar services at every point of sales throughout the country for the same request raised by customers. Although standard working processes and procedures are significant, the role of sales representatives in the service provision and ensuring customers‟ satisfaction cannot be undermined because in most cases provision of service involves person to person encounters between the contact employee and the customer. In ethio telecom points of sales this service encounter is between sales representatives of the company and customers.
The interactions or encounters between sales representatives in point of sales and customers are the major component of service quality and customer satisfaction. As Diane and Eduardo (2006) stated, while many factors are important in improving service quality, customer perception of the quality of service is strongly influenced by the social interactions they experience with employees. The behaviors of frontline service employees are critical to customer evaluation of the service encounter (Hartline, Maxham & McKee, 2000). As Amy (2004) stated the contact employee plays an important role in the delivery of service quality as well as the formation of customer satisfaction. In this case sales representatives and other employees in ethio telecom points of sales have an important role in delivering quality service and guarantying customer satisfaction.
Despite efforts undertaken by the company to improve the service quality of its points of sales, there are still customer complaints regarding the sales skill of sales representatives, instability of its system, the way customer complaint is handled, design & comfort of waiting areas and the inconvenient location of point of sales.
This study is primarily observed by the fact that the empirical documentation in the area of customer satisfaction and service quality regarding the country‟s sole telecom service provider, Ethio telecom, are focused on the after sales service performance and customer satisfaction level.
This study mainly focuses on ethio telecom‟s points of sales service performance and level of customers‟ satisfaction with the provided services.
1.3. Research Questions
Based on the identified research problem, the research questions are formulated as follows and the study provide answers for the following major questions:
1.4. Objectives of the study
1.4.1 General objective
The main objective of this study to identify effect of service quality dimensions on level customer satisfaction in ethio telecom point of sales.
1.4.2 Specific objectives
1.5. Definition of Terms
Table 1.1 Definition of Terms
1.6. Significance of the study
When compared to the long aged telecom service history of Ethiopia, only limited numbers of studies were undertaken up to now in relation to service quality and customer satisfaction with the telecom services. Those studies also mainly focus on the after sales service performance and customer satisfaction level. This study contributes to the knowledge on service quality and customer satisfaction level in ethio telecom points of sales. The study findings also be relevant input to the management of ethio telecom in identifying the existing strength or weakness of service quality delivery and level of customers satisfaction experienced by customers during their visit to the company‟s points of sales.
1.7. Delimitations of the study
The purpose of this study is limited to assess the level of customer satisfaction and quality of services provided in ethio telecom point of sales from the view of customers, who visited ethio telecom‟s points of sales to get different services. Currently the company is taking different measures to improve the quality of service provided in point of sales; however, this study will not assess these efforts of the company in this study.
Geographically, this study is also limited to ethio telecom customers who uses the company‟s points of sales located in the capital city, Addis Ababa.
1.8. Organization of the study
The introduction part of the study is chapter one. Back ground information, problem statement, research questions, objective of the study, operational definitions, significance and delimitation of the study discussed in this chapter.
Chapter two, existing literatures related to service quality and customer satisfaction will be assessed. Ethio telecom‟s brief background information with existing studies related to service quality and customer satisfaction which focused on the company is presented and theoretical frame work on the relationship between customer satisfaction and service quality developed.
The third chapter explains the methodology of the research. The research design and research methods will explained in this chapter starting from how the data collection instrument is prepared to how the collected data is analyzed.
Chapter four discusses the empirical findings and analysis of the study with interpretations. And the last chapter, chapter five, will present conclusion based on the analysis result and recommendations provided by the researcher.
THE EFFECT OF SERVICE QUALITY ON CUSTOMER SATISFACTION: THE CASE OF ETHIO TELECOM POINTS OF SALES
Attached Files