SERVICE QUALITY AND CUSTOMER SATISFACTION

MADDA WALABU UNIVERSITY

COLLEGE OF BUSINESS AND ECONOMICS

MASTER OF BUSINESS ADMINISTRATION (MBA)

Article review assignment for research methodology

Submitted to: Melese Chala (Asst.prof)

Submitted by:-Degife Tediso

ID: -PGE/19595/12

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Abstract-This research deals with the effect of service quality on customer satisfaction of ethio
telecom call center service. The objectives of the research were to examine the quality of service
provided by Ethio Telecom’s call center or 994 and its effect on customer satisfaction by
SERVPERV model.
A deductive research approach was used to execute the study. Data was gathered
using the questionnaire from 358 respondents (customer of call center service of ET)
who were selected using the stratified random sampling technique. The data collected
from the questionnaire were analyzed using statistical tools such as mean, correlation, and
logistic regression analysis. The findings of the study revealed that, all the service quality
dimensions (reliability, responsiveness, empathy and assurance) have positive and significant
relationship with customer satisfaction. Also the finding of this study indicates that customers
were most satisfied with the assurance dimensions of service quality followed by responsiveness.
Accordingly from the regression result it is observed that all service quality dimensions have
positive and significant effect on customer satisfaction. Furthermore, 22.7% of the variations in
customer satisfaction explained by service quality dimensions in ethio telecom call center
service (994). Based on the findings of the study, the researcher forwarded some
recommendations to the call center management.
Key Words:- ethio-telecom, service quality, customer satisfaction, cellular phone and network
coverage.

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INTRODUCTION

In service industry, the concept of quality holds the main position. The relationship with the
customer is based on the promise that customer satisfaction is achieved through providing
standard quality of service. The high quality demands on customer’s end is becoming prominent
due to the growing fact that high level of service quality leads to sustainable competitive
advantage in the competitive business environment (Sureshchandar, 2002) It is not surprising to
know that quality level of services is the leading phenomena to plan strategies in the services
firms (Khamalah and Lingaraj 2007).
Service has been defined in many ways by various scholars through time. Still there is no
universal definition of service. But these are well known definitions of service. A service is any
act or performance that one party can offer to another that is essentially intangible and does not
result in ownership of anything. Its production may or may not be tied to a physical product
(Kotler & Keller, 2012). Another definition is by Gronroos, (2001) defined service as an activity
or series of activities of more or less intangible nature that normally, but not necessarily, take
place in interactions between the customer and service employee and/or systems of the service
provider, which are provided as solutions to customer problems.

Ι Back Ground of the Study

In service industry, the concept of quality holds the main position. The relationship with the
customer is based on the promise that customer satisfaction is achieved through providing
standard quality of service. The high quality demands on customers end is becoming prominent
due to the growing fact that high level of service quality leads to sustainable competitive
advantage in the competitive business environment (Sureshchandar, 2002) It is not surprising to
know that quality level of services is the leading phenomena to plan strategies in the services

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firms (Khamalah and Lingaraj 2007).
Service has been defined in many ways by various scholars through time. Still there is no
universal definition of service. But these are well known definitions of service. A service is any
act or performance that one party can offer to another that is essentially intangible and does not
result in ownership of anything. Its production may or may not be tied to a physical product
(Kotler & Keller, 2012). Another definition is by Gronroos, (2001) defined service as an activity
or series of activities of more or less intangible nature that normally, but not necessarily, take
place in interactions between the customer and service employee and/or systems of the service
provider, which are provided as solutions to customer problems.

Customer satisfaction is a personal feeling of either pleasure or disappointment resulting from

the evaluation of services provided by an organization to an individual in relation to expectations
(Oliver, 1980). Customer satisfaction is a comparison of customer expectations with perception
regarding actual service encounter (Huffman & Bateson, 2001). Various authors have written
about determinant factor of customer satisfaction. Although there are debates among them, most
of the authors explained that quality is major factor in satisfying customer. Service quality has
therefore been defined as an overall judgment similar to attitudes towards the service and
generally accepted as an antecedent of overall customer satisfaction (Zeithaml and Bitner, 1996).
Since customer satisfaction has been considered to be based on the customer‟s experience on a
particular service encounter, (Cronin & Taylor, 1992) it is in line with the fact that service
quality is a determinant of customer satisfaction, because service quality comes from outcome of
the services from service providers in organizations. Another author stated in his theory that
“definitions of consumer satisfaction relate to a specific transaction (the difference between
predicted service and perceived service) in contrast with „attitudes‟, which are more enduring
and less situational-oriented,” (Lewis, 1993). Regarding the relationship between customer
satisfaction and service quality, Oliver (1993) first suggested that service quality would be
antecedent to customer satisfaction regardless of whether these constructs were cumulative or
transaction-specific.
Quality is generally regarded as being a key factor in the creation of worth and in influencing
customer satisfaction. Hence, the telecommunication industry has to be strategically positioned
to provide quality service to satisfy customer. To provide improved quality service,

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telecommunication companies need to investigate degree of customers‟ sensitivity and
expectation towards service quality. Armed with such information, telecommunication outfits are
then able to strategically focus service quality objectives and procedures to fit the market.
The formerly known “Ethiopian Telecommunications Corporation (ETC)‟‟ is introduced in
1894, seventeen years after the invention of telephone technology in the world. ETC is state
owned sole telecommunication service provider in Ethiopia. The Ethiopian government has
decided to transform the telecommunication infrastructure and services to world class standard,

considering them as a key lever to the development of Ethiopia. Thus, Ethio Telecom (ET) is
born out of ETC on December 2, 2011, in order to bring about a paradigm shift in the
development of the telecom sector to support the steady growth of our country.
Currently Ethio Telecom provide telecom service in the entire country on voice, internet, data,
channels and value added services (VAS) with comprehensive plans in place to meet the
requirements set out by the Ministry of Communications & Information Technology (MCIT)
and peoples of Ethiopia (www.ethiotelecom.et).
According to Trevor Arden and Stephanie Edwards (2009), customer service is a sum total of
what an organization does to meet customer expectations and produce customers‟ satisfaction. In
order to meet expectations of customers, organizations must study their own service
characteristics. Service characteristics are the individual elements that make up the service
provided to customers. According to Zeithaml and Bitner (2003), One path to achieving
customers satisfaction is through effective customer service. Customer service is the provision
of service to customers, before, during and after a purchase. Creating satisfied customers include
prompt and effective response and solutions to their need and complains.
One of the most basic types of customer service is call center. A large business will often devote
an entire department to taking calls free of charge from customers who have needs or concerns
about the business' service or product. The representatives who work at the call center will
usually be the first people to hear about the customers' concerns and will either resolve the
problem or contact the people who can. Company call centers are the link between customers
and the company, and how they handle customer concerns reflects on the company in a very
important way.
According to “the Call Center Association, 1999 call centers are physical or virtual operation

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within an organization in which a managed group of people spend most of their time doing
business by telephone, usually working in a computer – automated “environment” . Call center
sector has emerged globally in the last 10 to 15 years around the globe. It serves large number of
customers and wide varieties of services from very simple to complex. Call Centers are used to
provide various services free of charge which include customer support services, technical

support services, sales and telemarketing services, administrative support services, customer
relationship management, finance and accounting services, human resource management etc.
Now a day's Call centers are the major channels of communication with the customers. Today's,
call center industry is one of the most rapidly growing industries in the world. Call centers are
providing a mix of services like customer support, technical support, sales and telemarketing,
administrative support, customer relationship management, financial services, human resource
management. In Ethiopia, call center industry is in infant stage relative to other countries who
have call center services for example, in India call center Industry is a huge industry employing
more than 330,000 people and is worth about £3.2 billion a year and growing at a very fast rate
of around 25% per annum. Today, more than 500 companies of UK, USA and other developed
countries are outsourcing their call center activities to India.
The formerly known Ethiopian Telecommunication Corporation started operator based call
center service namely 997 and 998 through manually operated system serving by operators. The
997 call center service was open for all types of customer for any enquiry but mainly customer
were calling for directory and bill information on other hand 998 call center deployed for helping
customer to assist for communicating international call servicing as an exchange site. When the
old ETC is transformed to ET in 2011 the call center service also changed its name to 994 and
nature of service, system and work flow also changed. (www.ethiotelecom.et).
Currently Ethio Telecom provide two types of call center services namely 994 and 980 in four
different places by employing nearly 2315 staffs, both services are provided through online
telephone supporting by IVR (interactive voice response). 994 call center is accessible to all
service users of Ethio Telecom around the country and it‟s serving customer in five different
languages specifically English, Amharic, Oromiffa, Tigrigna and Somali, whereas 980 call
center is dedicated only for selected enterprise, VIP and Key account customers of the company
and the customers are served in English and Amharic languages. 994 call center services work

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24/7 to support customer enquiry by providing full information about ET products and services,
subscription requirements, billing and related enquires, activation of value added services, fault

registration, status update and follow up but even if the support given by advisors of 980 and 994
are the same the working hour of 980 call center is from Monday to Saturday in office hours.
According to the study by Collart (2000), one of the determinants of success of a firm is how the
customer perceives the service quality, as this is the key driver of the perceived value. It is the
perceived value which determines customers‟ satisfaction. In ethio telecom, call centers are
trying to satisfying customers by reducing the overall cost of transaction and improving the
quality of interaction with customers. But it's becoming difficult for call centers to make a
balance between quality and efficiency while trying to achieve companies‟ objectives. The major
objective of this study, therefore, is to examine the impact of service quality dimensions on
customer satisfaction in ethio telecom call centers and to find out important dimensions of
services having greater influence on customer satisfaction.

II. Objective of the Study

The main objective of this study was to examine the quality of service provided by ethio
telecom’s call center and its impact on customer satisfaction.
The specific objectives of the study were:
- To examine the overall satisfaction level of the customer.
- To examine which dimension have the higher quality gap.
- To examine the relationship between service quality dimensions and customer
satisfaction.
- To identify the significant dimension in predicting customer satisfaction.
- Identifying the dominant dimension of service quality that drives customers‟ perceived
service quality in call center

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III. Review of Related Literatures

Smith (2003) defined Customer as any individual or group of individuals to whom a company
supplies one or more products or services.
Customers could be any of a range of people or organizations; they could be:-
External customers:- individuals, end users or consumers of a product or service,
these are outside an organization.
Internal Customers:- individuals, departments or sub groups within an organization.
Corporate customers:- organization, that an organization does business with, such as
suppliers, distribution companies or transport providers. (These are also external
customers, as they too are outside the organization) Arden and Edwards (2009).

What is Service?
Service is any act or performance that one party can offer to anther that is essentially intangible
and does not result in the ownership of anything. Its production may or may not be tied to a
physical product (Kotler, 2006).
Service has different characteristics. Mudie & Pirrie (2006) in their book explained that service
has four key characteristics. These are intangibility, perish ability, variability (or heterogeneity)
and inseparability.
Arden and Edwards (2009) identified key four distinguishing characteristics of service with their
implications
1. Intangibility
Services cannot be generally be seen, felt, heard or smelled before being bought. The
potential customer is unable to perceive the service before (and sometimes during and
after) the service delivery.
Implications
Intangibility present problems in those customers may experience difficulty in knowing
and understanding what is an offer before, and even after receipt of the service.
2. Inseparability

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where as goods are first produced, then stored, finally sold and consumed, services are
first sold, then produced and consumed simultaneously. Service inseparability means that
services cannot be separated from their providers whether the providers are people or
machines.
Implications
the involvement of the customer in the production and delivery of service means that the
service provider must exercise care in what is being produced and how it is produced.
Proper selection and training customer contact personnel are necessary to ensure the
delivery of quality.
3. Variability
An unavoidable consequence of simultaneous production and consumption is variability
in performance of a service. The quality of the service may vary depending on who
provides it as well as when, where and how it is provided. As such, service quality is
difficult to control.
Implications
Reducing variability involves determining the causes, it may be due to unsuitable
personality traits in an employee which are difficult to detect at the selection stage and
increasing standardization of procedures may be required.
4. Perish ability
Services cannot be stored for later sales or use. If demand far exceeds supply, it cannot be
met.

2. Customer Service
Customer service is defined as an organization’s ability to constantly and consistently meet the
needs and expectations of its customers. In other words, customer service is meeting the needs
and desires of any customer.

Zeithaml and Bitner (2003) defined customer service as the service provided in support of a
company’s core products. Customer service is provided by various types of companies including
manufacturing, IT companies and service companies. Customer service provided by companies
most often includes answering questions, taking orders, dealing with billing issues, handling
complaints, and perhaps scheduling maintenance or repairs. Customer service can occur on site,

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or it can occur over the phone or via internet. Many companies operate customer service call
centers, often staffed around the clock. Quality customer service is essential to build customer
relationships.
Service quality
According to Irons (1997), quality and value can only be judged in a context of customers‟
expectations and experiences. It is value to the customer which should be the driver of quality
and this need to be a dynamic factor, responding to change.

The aim of providing quality services is to satisfy customers. Measuring service quality is a
better way to dictate whether the services are good or bad and whether the customers will or are
satisfied with it. A researcher listed in his study: “three components of service quality, called the
3 “Ps” of service quality” (Haywood, 1988). In the study, service quality was described as
comprising of three elements:
- Physical facilities, processes and procedures;
- Personal behavior on the part of serving staff, and;
- Professional judgment on the part of serving staff but to get good quality service.
He stated that “an appropriate, carefully balanced mix of these three elements must be achieved.”
(Haywood, 1988) What constitutes an appropriate mix, according to him will, in part, be
determined by the relative degrees of labor intensity, service process customization, and contact
and interaction between the customer and the service process. From the look of things, this idea
of his could be design to fit with evaluating service quality with the employee perspective.
Service Quality Dimensions
In services marketing literature, service quality has been reported as a second order construct
being composed of first order variables (Sachdev and Verma, 2004). Various authors have
provided different conceptualizations over time.

Customer Satisfaction
Satisfaction is the consumer’s fulfillment response. It is a judgment that a product or service
feature, or the product or service itself, provided (or is providing) a pleasurable level of
consumption-related fulfillment, including levels of under or over-fulfillment (Oliver 2010).

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Zeithaml and Bitner (2000) defined customer satisfaction as the customers‟ evaluation of a
product or service in terms of whether that product or service has met their needs and
expectations.
Customer satisfaction can also be defined as the “customer’s response to the evaluation of the
perceived discrepancy between prior expectation and the actual performance of the product as
perceived after its consumption” (Tse and Wilton, 1998). Jamal and Nazer (2002) cited argued
that customer satisfaction is not only linked with the view of customers but also on their
experience with the service delivery process.
Customer Expectations and Perception
Expectations are formed prior to usage of the service and perceptions are the customer’s
evaluation of the service. After the service has been consumed, customers compare the perceived
service with the expected service and if the perceived service meets or exceeds the expected
service, the customer is satisfied (Mudie and CTTAM,
1993)

The most important gaps observed would be:-

If one accepts the view that quality entails consistently meeting or exceeding customers‟
expectations, the manager’s task is to balance customer expectations and perceptions and to close
any gaps between the two. A total of seven types of gaps are identified;
I. The knowledge gap:- is the difference between what service providers believe customers
expect and customers‟ actual needs and expectation.

II. The standard gap:- is the difference between management’s perception of customer
expectations and the quality standards established for service delivery.

III. The internal communication gap: - is the difference between what the company’s advertising
and sales personnel think are the product’s features, performance and service quality level and
what the company actually able to deliver.

IV. The perception gap: - is the difference between what is , in fact, delivered and what
customer’s perceive they have received

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V. The interpretation gap: - is the difference between what a service provider’s communications

Offer to (in advance of service delivery promise and what a customer thinks was promised by
these communications.

VI. The delivery gap: - the difference between specific delivery standard and the service
provider’s actual performance.
VII. The service gap: - the difference between what customers expect to receive and their
perception of the service that’s delivered.

IV. Methodology

The target of this study was Ethio Telecom’s 994 and 998 call center Amharic IVR users. On
average there are around 1,713,351 customers who accessed the call center per week they are
divided in five languages by the system according to the user language preference. Out of the
total number of calls made to call center; 1,119,291 calls handled by Amharic, 30,547 call
handled by English, 436,368 calls handled by oromiffa, 72838 calls by somaligna and the rest
53052 by Tigrigna. Since the call center service is the type of service which is accessible 24/7 to
the customers through online telephone, the above mentioned service user can call to the call
center any time to get support or information regarding the service given by the company. This
study targeted 1,119,291 customers of the call center Amharic IVR users.
Sampling Technique
in this study probability sampling method was applied, stratified sampling technique was used to
stratify the population by language and simple random sampling technique was implemented to
select population of the subject who represent the whole customer of the call centers. One week
data was taken to select the sample size, per week from the total population of 1,713,351

customers who call to the call center 1,119,291 are served online by Amharic The random
sampling technique was opted since there is no reason to purposely select subjects, because the
service given by the call center for all customer have the same standard all advisors use the same
tools, same procedure of serving customers and give the same response based on the customer

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request in addition to that customer of call center services almost all the time calls for the same
reason due to that one customer could represent the other. The reason why Amharic IVR users
were selected is because according to the report from the total call made to the call center the
lion share was served by the Amharic language and it is was assumed that it increases the
representativeness of the sample.
The total population size of the call center is 1,713,351 according to the week data taken from
the system, 1,119,291 of them call to Amharic IVR to get the service, that mean per day an
average of 159,897 customers are served by the call center. The sample was taken from the
customer who called to the call center during one week which is 1,119,291 in number and
according to the sample size calculator with the margin error of 5% and 95% confidence level
the recommended sample is 385 customers. Because the sample size doesn’t change much more
as population become larger. Accordingly from 385 samples 358 of them of them were used for
to fill the questionnaire by making out bound call. The reason for using out bound call was that
because the service of Ethio Telecom is nationwide and different customers found in
geographically dispersed areas making outbound call to them would be effective in addition they
would be easily cooperative to answer the questions.
Data Sources and Collection Instrument
For these study primary sources was used. Primary data was collected via communicating the
study population through major tools i.e. questionnaire. The questionnaire was designed in five
liker scale measurement with five response categories (strongly agree, agree, neutral, disagree
and strongly disagree). A 26 item measure was used to indicate the customer degree of
agreement for the 26 performance statements, based on their assessments of the service provided
by the call center adopted from SERVPERF. Customer satisfaction was measured with one scale
adopted from Lovelock and Wright (1999) with response ranging from „very satisfied‟ to „very
dissatisfied‟.

Questionnaire was the major tool used since most of customer’s call to call center to get Ethio
Telecom related services, their data was collected from the system and outbound call was made
to selected target customers because telephone call will help to access geographically dispersed
population since the telecom service is nationwide.
Questionnaire was designed to conduct the telephone interview, as well as to have a broader

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picture of the practice and philosophy of ET‟s call center service. Most of the research questions
require respondents to remember and thoroughly think about their customer service experience
and practices of the call center service.
Method of Data Analysis

Reliability Test

To measure consistency of the scale, the Corn batch alpha coefficient was used as a measure of
reliability. A high value of the Cranach alpha coefficient suggests that the items that make up
the scale „hang together‟ and measure the same underlying construct.
Descriptive analysis
Descriptive analysis mean, frequency distribution, and standard deviation was applied to assess
the level of customer satisfaction and overall quality of service of the five dimensions and each
respective attribute and to summarize the basic findings from the sample. The descriptive
statistical results were presented by tables, frequency distributions and percentages to analyze the
data. This was achieved through summary statistics, which includes the mean values and
percentages which were computed for each variable in this study. The data collected through
questionnaire was analyzed by Statistical package for social sciences (SPSS).
Pearson Correlation analysis

In this study Parsons correlation coefficient was used to determine the relationships between
service quality dimensions (Tangibility, reliability, responsiveness, assurance and empathy) and
customer satisfaction.
Binary logistic Regression Analysis
Logistic regression analysis was used to examine the effect of service quality dimensions
(Tangibility, reliability, responsiveness, assurance, and empathy) on customer satisfaction. Since
the study has more than two independent variable to investigate how independent variables are
related to the dependent variable, how each independent variable influences the dependent
variable and how much each variable influence it binary logistic regression model used.
3.6 Ethical Consideration
concerned management officials of ethio telecom were informed about the study. In addition,
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the respondents were asked for their consent prior to the tools to gather the relevant information.
The respondents‟ responses are taken absolutely confidential and they were informed that no
part of their response is exposed to any one without their complete consent. And respondents
were approached with open mind so as to encourage them forward all their opinions freely.

THEORIES DISCUSSED IN THE PAPER WOULD INDICATE:

Numerous studies in many service sectors confirmed the positive relationship between service
quality and customer satisfaction (Brady and Robertson, 2001; Cronin and Taylor, 1994;
Parasuraman et al., 1994) with some conflicting evidence (Rosen and Suprenant, 1998.

Conceptual Framework

The general idea from the past literature is that there is a relationship between customer
satisfaction and service quality; also that service quality could be evaluated with the use of five
service quality dimensions and the most useable is the SERVPERF scale. Based on the literature
presented above, the following conceptual framework of the study has been developed.

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In this study probability sampling method was applied, stratified sampling technique was used
to stratify the population by language and simple random sampling technique was
implemented to select population of the subject who represent the whole customer of the call
centers.

Method of Data Analysis

Reliability Test

To measure consistency of the scale, the Corn batch alpha coefficient was used as a measure of
reliability.
A high value of the Cranach alpha coefficient suggests that the items that make up the scale hang

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together‟ and measure the same underlying construct.
Descriptive analysis

Descriptive analysis mean, frequency distribution, and standard deviation was applied to assess
the level of customer satisfaction and overall quality of service of the five dimensions and each
respective attribute and to summarize the basic findings from the sample.

Binary logistic Regression Analysis

Logistic regression analysis was used to examine the effect of service quality dimensions
(Tangibility, reliability, responsiveness, assurance, and empathy) on customer satisfaction. Since
the study has more than two independent variables to investigate how independent variables are
related to the dependent variable, how each independent variable influences the dependent
variable and how much each variable influence it binary logistic regression model used.

Ethical Consideration

Concerned management officials of ethio telecom were informed about the study. In addition,
the respondents were asked for their consent prior to the tools to gather the relevant information.

V. SUMMARY OF FINDINGS

The study was conducted to examine the effect of service quality on customer satisfaction in
ethio telecom call center service. A total of 358 samples were selected for the study and the
study used SERVPERF model questionnaire for collecting data from customers of the call
center. Accordingly, a five dimensional instrument comprising of tangibles, reliability,
responsiveness, assurance and empathy has been used for the study. The data obtained from the
respondent was analyzed using various statistical tools. From the Pearson‟s correlation result it is
indicated that there is a positive and significant relationship between the five service quality
(tangibility, responsiveness, assurance, empathy and reliability) and customer satisfaction.
Accordingly, assurance is found to have the highest correlation with customer satisfaction. More

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over assurance has the highest beta value
on the regression model and is the dominant service quality dimension with the highest impact
on customer satisfaction. The descriptive analysis also confirmed that assurance has a mean
value of 4.43 which implies that customers of ethio telecom call center are satisfied with the
assurance dimension of service quality and the company should continue to maintain it in the
future.

The correlation result indicates that the highest correlation is found between empathy and
assurance while the lowest relationship was found between reliability and tangibility. Thus the
change in one of the service quality dimension will positively affect the other service quality
dimension. Tangibility is the lowest service quality dimension, according to the result of Pearson
correlation.

In terms of the stated research hypotheses the following specific empirical findings emerged
from the investigation: The five service quality dimensions including tangibility, reliability,
assurance, responsiveness and empathy have positive and significant effect on customer
satisfaction. The findings of this study also indicated that assurance is the most important factor
to have a positive and significant effect on customer satisfaction followed by empathy,
reliability, responsiveness and tangibles.

The results of customers‟ overall satisfaction analysis showed that call center customers are
mostly satisfied by service quality of call center. In addition the finding from the logistic
regression result indicates all the service quality dimensions have a positive impact on customer
satisfaction and assurance is the dominant service quality dimension which affects customer
satisfaction while tangibility is the least to influence customer satisfaction

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