A Customer Loyalty a Key to Success: A Case Study in Telecom Sector of Pakistan

Abstract

This paper determined the role of service quality as an independent variable, with perceived value, word of mouth, and customer satisfaction as mediating variables, in creating customer loyalty among telecom users. Extensive literature shows the impact of these factors on customer loyalty. The telecom industry faces intense competition due to market saturation, declining ARPU, shifts to cheaper internet-based communication tools, unexpected mergers, rising costs, and decreasing margins. To survive and grow, telecom companies must devise effective customer retention strategies. Data were collected via self-administered questionnaires from a simple random sample of 300 university students in Rawalpindi and Islamabad. Analysis using SEM in AMOS 20 tested both direct (service quality → customer loyalty) and indirect relationships through mediators. Results revealed that customer satisfaction is the strongest mediator, having a greater effect on customer loyalty than the direct link with service quality. The study concludes that improving customer satisfaction enhances service quality, customer loyalty, and industrial professionalism, while corporate image and switching barriers are suggested as potential areas for future research.