How value and trust influence loyalty in wireless telecommunications industry

Authors:
Heikki Karjaluoto;Chanaka Jayawardhena;Matti LeppäNiemi;Minna PihlströM
Affiliations:
School of Business and Economics, University of Jyväskylä, PO Box 35, FIN-90014 Jyväskylä, Finland;Hull University Business School, University of Hull, Hull HU6 7RX, UK;School of Business and Economics, University of Jyväskylä, PO Box 35, FIN-90014 Jyväskylä, Finland;Hanken School of Economics, PO Box 479, FIN-00101 Helsinki, Finland
Venue:
Telecommunications Policy
Year:
2012

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Abstract

Despite making significant investments in enhancing the customer service experience, long-term customer loyalty remains an elusive dream for many service providers. Particularly in the telecommunications industry, switching providers even from within continuous contract relationships is easy and companies struggle to retain their customers. Trust and value are considered cornerstones of long-term relationships, so it is perhaps surprising that previous research on how relationship age and usage level actually affect value, trust and loyalty is inconclusive. The current research is set in the telecommunications services field and draws on a large-scale survey undertaken in Finland. The findings support the contention that perceived value relates positively to loyalty, and that trust mediates that relationship. Surprisingly, in the telecommunications industry, increasing relationship age and usage level strengthen neither value and loyalty nor the links between trust and loyalty. The results may be explained by the unique characteristics of the highly competitive mobile telecommunications sector, and confirm the view that loyalty does not pay without strategies that value long-term customers and thereby build trust with new customers.