THE MEDIATING ROLE OF SATISFACTION IN DEVELOPING CUSTOMER LOYALTY IN THE MALAYSIAN TELECOMMUNICATION INDUSTRY

Customer loyalty has been a highly sought topic to enable growth and competition in the current market. Stiff competition in the telecommunication industry has caused telephone companies in Malaysia to compete with each other to gain customer loyalty with the aim of becoming a major service provider in the industry. While companies have strived to maintain their customers, issues related to customer loyalty arises when the total mobile subscriptions and penetration rate in Malaysia decreased in 2016 and the first quarter of 2017. With difficulties in differentiating their services, customer loyalty is essential in increasing profitability and achieving long term success in the service industry. Previous studies showed that limited studies have been conducted in Malaysia on customer loyalty towards the telecommunications industry. Thus, this study aims to fill the contextual gap by investigating the effects of the independent variables and mediating effects of satisfaction. In addition, this study intended to investigate perceived quality and satisfaction that influence customer loyalty and perceived quality that influences satisfaction. It also aimed to investigate the influence of satisfaction as a mediator between perceived quality and customer loyalty. Partial Least Squares (PLS) was used to analyze the data. A total of 531 questionnaires were distributed and 431 questionnaires were returned and usable. The findings showed that perceived quality and satisfaction influenced customer loyalty, whereby perceived quality also influenced satisfaction. Satisfaction also mediated the relationship between perceived quality and customer loyalty. The outcome of this study can be used by telephone companies to enhance and improve customer loyalty by providing an excellent service that meets the customers’ expectations in the context of the telecommunication industry in Malaysia