How to avoid customers leaving: the case of the Estonian telecommunication industry

Abstract

PurposeThe purpose of this paper is to show that the major factors affecting loyalty are dependant on the level of loyalty of customers.Design/methodology/approachA model of relationship between factors of loyalty and loyalty levels of customers was constructed and tested on the empirical data about 1,000 private customers from the Customer Satisfaction Survey of Elion, the biggest telecommunication company in Estonia. Logit model was used in order to examine which factors influence the probability of the customers remaining on their loyalty level or to moving to another loyalty level.FindingsThe findings of the study revealed that it is not accurate to treat all customers equally in terms of methods of increasing their loyalty. The results reveal that four analysed factors affecting customer loyalty (satisfaction, trustworthiness, image and importance of relationship) are playing different roles in the different levels of customer loyalty. The overall satisfaction and importance of a relationship build the foundation of any kind of loyalty. The reliability of products or trustworthiness of the vendor is most critical for behavioural loyalists and the image creation is the main tool for getting committed customers.Research limitations/implicationsThe method for collecting the source data set certain constraints on the adequacy of the model.Practical implicationsThe results presented in this paper could be used by firms developing targeted approaches as part of the aim of increasing customer's loyalty.Originality/valueThis paper introduces an original approach combining factors affecting the customers' loyalty with the customers' different loyalty levels. Also, the ladder of customer loyalty levels could be used in other research areas.