Components of Perceived Performance Measurement

Related literature has suggested several components that formulate a customer’s state of mind (satisfaction/dissatisfaction) regarding the provided service. Hence, satisfaction judgment covers a broader range of dimensions. However, such variables are derived from two main dimensions that condense the notion of satisfaction - cognitive and affective - as shown in table 2.3 below.

Perceived service quality which refers to a “consumer’s judgment about a product’s overall excellence or superiority” (Zeithaml, 1988, p.3) represents an essential component of satisfaction measurement. According to McDougall and Levesque (2000), perceived service quality comprises two variables - what and how a consumer perceives the service. While core quality (basic) refers to the perceived quality of [what]

a consumer has received, the relational aspects (Gronroos, 1985) (e.g. personnel contact, delivering, complaints etc.) represent [how] service was delivered, as a main dimension of perceived quality.

Table 2.3: Components of Perceived Performance Measurement

Source: Adapted from Wang and Li (2011), Gallarza et al. (2011), Zeithaml (1988) and Gronroos (1984)

63 Research conducted in the field of telecommunications services conceptualised value added services (VAS) as a component of service quality (Santouridis & Trivellas, 2010), an antecedent for customer satisfaction (Khuhro et al., 2011; Ali et al., 2010), or as main factor affecting consumers’ brand selection (Alom et al., 2010). Consequently, value added services (VAS) which are noncore services (Alom et al., 2010) have been perceived to be strategic ‘non-price tool’ intended to differentiate the service(s) of one provider from the other (Sharma & Singh, 2012) through its incorporated value.

In addition, after sale services (Nemati et al., 2010) and corporate image (Andreassen &

Lindestad, 1998; Oliver, 1980) were also highlighted in the literature as different ingredients of customer satisfaction.

In particular, research carried out on evaluating customer satisfaction in telecommunications included other, different, variables - ease of use, time efficiency (Devaraj et al., 2002), customer support services, call clarity, user friendliness and customer complaint (Khuhro et al., 2011) - as important aspects in the evaluation process. In addition, pricing plan, coverage of the calling area and clarity of sound, precision of billing service and easy access to provider, (Lee et al., 2001), and trust (Nawaz & Usman, 2011) constituted different sub-dimensions of satisfaction measurement scale in telecommunications research.

From the above, it could be concluded that customer satisfaction is a pre-consumption [expectations] post-consumption [perceived performance] judgment process (Oliver, 1997, 1980) including a broader range of dimensions. From a manager’s perspective, organisational superiority is achieved when an organisation succeeds in managing the potential gap between expectations and the cognitive and affective aspects of perceived performance.

Thus, each of the included variables in the developed figure (2.3) below constitutes a crucial aspect that should be taken into account in managing customer satisfaction. With regard to perceived performance variables, firms need to maximise the level perceived performance of each of the cognitive (e.g. perceived service quality: what and how, after sale service, etc.), and the affective dimension (e.g. perceived value, corporate image, etc) of performance (figure 2.3).

Customer expectations should be managed in a way to achieve a balance between firm’s capabilities (managerial and technology) and the level of promise made, taking into account that to adopt ‘inflated expectations’ represents a challenge, as any

64 deficiency in meeting commitments of promoted promises will cause a negative and long-term influence on consumer satisfaction and retention which is basically a learning history-based behaviour.

Figure 2.5: Customer Satisfaction: Drivers and Mechanisms/Attitudinal Perspective

Source: Ashour (2014)

To conclude, the above aspects — in practice — embody the scope in which a firm manages its different marketing capabilities in order to enhance the overall perceived performance by the end customer as well as to manage customer expectations efficiently. In other words, these dimensions represent the specific points, units, or functional areas in which each telecommunications service provider manages the

65 comparison process [confirmation/disconfirmation], its antecedents [expectations, experience and perceived performance] and consequences [satisfaction/dissatisfaction], the notion which concludes the mechanisms of building the satisfaction state for a consumer.

2.4.3 The Behavioural Perspective Model (BPM) as an Analytical tool (the second pillar of the research framework)

Customer Retention (CR) as a Behaviour

The telecommunications industry represents one of the most dynamic and competitive markets. In such a high-velocity environment, to maintain market share seems to be the foremost concern for telecommunications service providers (TSPs). Consequently, the key success factor in telecommunications depends on how TSPs can establish and maintain sustainable value-driven relationship with their customers. Hence, success in such a market relies on a firm’s ability to protect its “subscriber base” and to attain customer loyalty which is a “necessity for the maintenance of a brand’s life in the long term” (Vanniarajan & Gurunathan, 2009; Lim et al., 2006; Aydin et al., 2005, p.89).

Relationship marketing encompasses attracting, maintaining and enhancing customers’

relationships with the firm (Berry, 1995); and how to maintain this relationship over the lifetime of the customer represents the most prominent aim for service providers (Ryals, 2002).

Customer retention is the “maintenance of continuous trading relationships with customers over the long term” (Buttle, 2009, p.258). According to Jeng and Bailey (2012), it refers to the repeated transactions on a contractual-based relationship with customers, either formal or informal, over a period of time. Customer retention is thought to be the repeated patronage of a marketer or supplier by a customer (Alshurideh et al., 2012). Also, it can be viewed as a rate displaying the “percentage of customers at the beginning of the period who still remain customers at the end of the period” (Payne, 2000, cited in Petzer et al., 2009, p.33).

In the context of services, Cronin and Taylor (1992) affirmed the positive influence of customer satisfaction on repurchase intention. In telecommunications research (e.g.

Ranaweera & Prabhu, 2003) it reflects the customer’s future propensity to stay with their current service provider. Consequently, customer retention describes the state

66 when a customer keeps on buying the same provider’s offering over a long period of time (Blattberg et al., 2001).

As mentioned earlier, many previous researchers confirmed the notion that it costs a company less to implement a retention strategy than it does to implement a customer acquisition strategy. Contrary to acquisitioning, in the retention strategy, where there is a likelihood of a long ‘customer lifetime’, the cost of serving existing customers tends to fall and their purchases increase during their lifetimes (Alshurideh et al., 2012). In other words, through extending the customer lifecycle, relationship management schemes (Gilbert, 1996) can reduce the cost related to existing customers, the matter which is reflected directly to profitability (Bentley, 1999).

As the cost of losing customers is rising, service providers should search for innovative ways in order to retain their existing customers (Petzer et al., 2009).

Consequently, such service providers are more likely to survive than others according to Choi and Chu (2001) who highlighted the critical role of ‘services’ in this regard.

Customer retention, loyalty, and purchasing behaviour are three interrelated concepts.

Yin and Kannan (1999) defined loyalty as consisting exclusively of repeat purchase behaviour, and it has a direct effect on profitability as Bentley (1999) stated. Jeng and Bailey (2012) argued that the construct of customer retention focuses on repeat patronage while Zeithaml et al. (1996) described customer retention as future behavioural intentions. Ranaweera and Prabhu (2003) followed Cronin et al. (2000) who treated behavioural intentions and customer retention as synonymous constructs.

Correspondingly, Hennig-Thurau and Klee (1997) argued that, although the three terms (customer retention, loyalty and purchasing behaviour) seem to be closely related, customer retention has a more prominent functional role in firms’ relationships.

In the same line of argument, customer satisfaction and customer retention are often studied simultaneously as two interrelated constructs. To a large extent, marketing literature considered customer satisfaction as a fundamental determinant of long-term retention. Customer retention is one of the most important indicators of customer satisfaction (Danesh et al., 2012); hence, the former is considered as a motivator of the latter (Jeng & Bailey, 2012).

A distinct body of related literature has agreed that the more satisfied customers are, the greater is their customer retention (Alshurideh et al., 2012; Ranaweera & Prabhu, 2003;

67 Gerpott et al., 2001; Anderson & Sullivam, 1993); however, this is not always the case, as switching barriers can restrict dissatisfied customers from making changes.

In conclusion, the behavioural aspects of customer retention are clearly highlighted in the different definitions of the concept. Prior research viewed customer retention within its behavioural context as repeated transactions (Jeng& Bailey, 2012), repeated patronage (Alshurideh et al., 2012), customer keeps on buying (Blattberg et al., 2001), and keeping customers active with the firm (Peppard & Rylander, 2006). Consequently, the evaluation of customer retention should be approached from a behavioural perception as Kamakura et al. (2005) and Alshurideh (2010) argued.