The Influence of Customer Equity on Customer Loyalty among Telecommunication Service Provider Users

Abstract

In telecommunication companies, retaining customers is a major concern because customers have variety of choices to choose from. Previous studies have discovered that customer equity plays a significant role in retaining the existing customers as well as acquiring new customers. Nowadays, since the customers are offered with the same products and services, but from different service providers, customer equity (Value Equity, Brand Equity and Relationship Equity) will assist the customers to decide which service providers to be selected. The purpose of the study is to investigate the relationship between customer equity dimensions; namely, Value Equity, Brand Equity and Relationship Equity, and Customer Loyalty among customers of Telecommunication Service Providers. Analysing 400 responses using multiple regression analysis from customers of the five major Telecommunication Service Providers (Maxis, Celcom, Digi, Tune Talk and U-Mobile), shows that all three dimensions of Customer Equity contribute significantly in explaining the variance in Customer Loyalty, indicating that companies have to leverage on the brand name of company, to provide competitive prices, quality and convenience of the products and services and fostering the relationship between the customers and the company through a customer loyalty program. Trust has been included as a moderating variable and the result indicates that it has no significant moderating effect on the relationship between customer equity and customer loyalty. The implications of the study are discussed further in the paper.

Key word: Customer Equity, Customer Loyalty, Trust, Telecommunication Industry

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