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Effects of Telecommunication Service on Customer Satisfaction (MTN And Glo) As Case Study

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CHAPTER ONE

INTRODUCTION

1.1 BACKGROUND TO THE STUDY

Nigerian Mobile Telecommunication is the fastest growing market in Africa. Nigeria, a developing country in 1992 introduced its first mobile phone services, through the joint venture between NITEL and DSL of Canada to form Mobile Telecommunications Service (MTS).

Nigerian telecommunication came into mainstream in 2001 when the deregulation of the subsector of the economy gave way to private involvement. The telecommunication system was opened up with the issuance of Global System for Mobile (GSM) unified license in 2001. Nigerian Telecommunication (NITEL) was the only operator in the market before 2001 with subscribers of about 500,000 from a population of 140million.

The regulatory body Nigerian Communications Commission (NCC), modernized and expanded the mobile telecommunication network and services by granting GSM license to three (3) service providers MTN Nigeria, ECONET Wireless (now AIRTEL), and the first national carrier, NITEL

(initially MTS, privatized to form MTEL). In 2002, the second national carrier, GLOBACOM was also granted license to commence operations. In 2007, ETISALAT acquired the unified access license from the federal government Nigeria. Since the launch of GSM, the number of subscribers in Nigeria has greatly increased. It was reported by Ndukwe in 2005 that between 1998 and 2000, the number of mobile lines was 35,000 but grew to over 11million as of March 2005, with a growth rate of more than a million lines annually since 2002.

This translated to an increase from the total density of 0.4 lines per 100 inhabitants in 1998 to 9.47 lines per 100 inhabitants currently. Additionally, the sector has attracted an investment of over US$8billion and has greatly increased the number of employed people directly (those working with the GSM companies) or indirectly (this includes various level of dealerships cell phone vendors, repair shop, suppliers of accessories, fixed and mobile call shops and street recharge card hawkers). The number of the employed people is reported to be over 300,000 Nigerians in 2005 (Ndukwe, 2005). Other benefits.

Organizations are increasingly being customer centric and are embracing customer-driven initiatives that seek to understand, attract, retain and build intimate long term relationship with profitable customers (Kotler, 2006).

The era whereby firms just concentrate on adding to their customer base has become a thing of the past. Customer retention has been very vital to all businesses of late. Any business with the aim of sustaining growth should not aim at only adding up to its customer base but have a strategy of maintaining them. This will provide the avenue for cross-selling of products and services.

Freeman (1999) added that firms should try and keep their customers. And one of the ways of doing this is through good customer service strategy. The telecommunications sector can be divided into three main areas: Telephony (both wired and wireless), Internet services, and value added service (Olajide, 2011).

According to Schneider and Chung (1994), for an organization in the service industry, the most appropriate criterion for organizational performance is customer satisfaction. Customer service is basically the relationship that a company builds with its customers. It involves providing support during the purchasing process and after.

A company has to make sure that both the service and the purchasing of a product have left the customer satisfied and happy. The reason is that a satisfied customer will not only return without looking at alternatives or comparing prices, but will recommend the store or firm to family members and friends. Customer service goes beyond providing products but imaaking your clients feel you really care about them. One way to make them feel that

way is by getting involved in community activities for instance channeling part of the profit made by the firms from the community to provide good drinking water, Hospitals, Roads and so on. Again, answering questions is another way to make a customer feel you actually take into account their concerns.

In other, words whether online or at the business premises, the people in customer service are supposed to have all the answers to the most common questions that customers’ raise. It will not be prudent to tell a customer, for instance, that “I am sorry; I wish I could answer your question.”

Gronroos (1982) defined the term as the total quality as customer’s perception of difference between the expected service and the perceived service. McCleary and Swan (1996) said that it is the difference between customer’s expectations for service performance prior to the service encounter and their perception of the service received. Gafan (2002) concluded that quality service is the subjective comparison that customers make between the quality of the service that they want to receive and what they actually get.

Performance is the accomplishment of a given task measured against preset known standards of accuracy, completeness, cost, and speed. In a contract, performance is deemed to be the fulfillment of an obligation, in a manner that releases the performer from all liabilities under the contract. Frempong (2002) said that poor performance of firms will lead to the deregulation of many of the telecom industries in many countries, of which Nigeria is no exception.

Thus, it is the responsibility of management to ensure that much attention is given to customers in the area of service so that the firms continue to thrive on the market in the face of the strong competition. This is because it is more expensive to gain a new customer than to retain an existing one. Thus, understanding the needs of your customers and providing them with the best customer service will ensure the sustenance of the business so that in the long run the performance of the firm will be affected.

Customers are always aiming to get maximum satisfaction not only from the products they buy but also n the way they are treated before and after sale. Winning in today’s marketplace entails the need to build customer relationship and not just building the products; building customer relationship means delivering superior value over competitors to the target customers (Kotler, 2002). Whether an organization provides quality services or not will depend on the customers’ feedback on the satisfaction they get from consuming the products, since higher levels of quality lead to higher levels of customer satisfaction (Kotler & Keller, 2009).

Most companies are adopting quality management programs which aim at improving the quality of their products and marketing processes, because it has been proven that “quality has a direct impact on product performance, and thus on customer satisfaction” (Kotler, 2002). The reason for this is to satisfy the customers. But, the question is, are customers satisfied because of the products or service quality? That is, are companies providing the actual qualities perceived by the customers/consumers?

Again, in the telecommunication market, competition is very high and the products and offerings are more and more comparable. This leads to reduced customer loyalty. Losing an existing high-volume customer means losing lots of revenue. Thus, understanding the needs of your customers and providing them with the best customer service will ensure the sustenance of the business so that in the long run the performance of the firm will be enhanced,  (Abiw-Abaidoo , 2011).

1.2 STATEMENT OF RESEARCH PROBLEM

According to Oladele (2009) an organization that consistently satisfies its customers, enjoy higher retention levels and greater profitability due to increased customer loyalty. A research in 2006 by Harvard Business Review confirmed that by averting 5 percent of customers leaving, a business’ profitability is likely to soar by a margin of between 25 and 95 percent. In 2008, Right Now Technologies found that 87 percent of customers stop doing business with a company due to poor customer service.

The study also found that loyal customers do not look at prices for as long as they feel good about a company. Instead they consider customer service as more important. Johnson (2004) added that service, both excellent and poor, has a strong emotional impact upon us as customers, creating intense feeling about the organization, its staff and its services, and influencing our loyalty. Spicuzza (1992) added that Quality customer service is more than offering a smile, a handshake, and “have a nice day”.

The importance of customer satisfaction and service quality has been proven relevant to help improve the overall performance of organizations, (Magi and Julander, 1996). Douglas and Conner (2003) also concluded that there is a direct result of expectation by today’s consumer that tangible needs will always be met, and were therefore not consciously considered as a requirement. For this reason every company works hard daily to win the hearts of customers by satisfying them in order that they become loyal customers to their brands in order to increase performance.

 

The problem of this study is propelled by need to empirically measure customer satisfaction with service delivery of MTN Company in Nigeria. The state of customer satisfaction with service delivery is not clear as there is scanty documentation on the issue. The goals set by government have only partly been met-especially with respect to the development in rural areas-and the quality of service is still low and has even deteriorated on some indicators.

Since the past decade, the industry has witnessed a tremendous increase in subscriber growth rate for all the mobile telecom operators (ITU 2008; Africa ICT indicators 2007). This growth trend could not be attributed to customer satisfaction; it is fundamentally due to the substantial growth in investment and expansion of network access during the last decade. This seems a success story, and there are high hopes that the service quality delivered by MTN will meet customer expectations, ideal service, or satisfaction.

However, there have been many complaints from customers about the service delivery of the mobile telecom networks in Nigeria. As a result, a statement released by Nigerian Communications Commission (NCC) profusely lamented that in spite of the appreciable growth and expansion recorded in the industry, “the quality of service is still poor”.Despite the economic and social benefits of the mobile telecommunications to Nigerian economy and market, unlike the developed countries, there is no marketing or management research attention to this sector.

However, it is probable that the mobile operators conduct satisfaction surveys and other marketing research but contact with the mobile operators for any useful information yielded no response. Hence, there is currently no literature material on customer satisfaction as it relates to the Nigerian mobile telecoms industry.

 

Some of the literatures available only focus on development of the telecommunications, mobile telephony, communications, (etc.) and evidently, the growth trend in the mobile telecom industry in Nigeria does not provide empirical support for the claim that customers are satisfied with the service delivery of MTN in Nigeria.

Therefore, the gap created by this information necessitates a further research study that will determine the empirical effects of customer satisfaction on Nigerian mobile telecoms industry. It is against this drawback that this study was carried out to determine customer satisfaction on mobile telecommunication service provider, using MTN Nigeria as the basis for the study.

The broad objective of this research work is to examine the impact of customer satisfaction on mobile telecommunication service provider while the specific objectives are to:

  1. examine the effect of customer care service on customer satisfaction.
  2. examine the effect of network quality on customer satisfaction.

iii. determine the impact of customer satisfaction on the market share of telecommunication (MTN) organization.

   

1.3 Research Questions

Based on the statement of problem the following research questions were raised:

  1.   How does the telecommunication service put in place satisfy customer?
  2.   To what extent does the online customer unit of Nigerian telecommunication companies satisfy customers requests?

iii.  To what extent does the offices customer officials of of MTN and Glo satisfy customers requests?

1.4 Objectives of the study

General objectives

To investigate the effect of telecommunication on customers satisfaction in a selected local government area in Ilorin.

Specific objectives

 Ø  To determine the impact of good customer service on profitability of telecommunication companies in Nigeria

Ø  To determine the relationship between good customer service and customer satisfaction in Nigeria.

Ø  To determine the relationship between customer satisfaction and the performance of service rendering firms in Nigeria.

Ø  To determine the relationship between satisfaction and customer retention.

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