Effect of call-clubs to institute local network effects in mobile telecommunication and its′ implications on brand loyalty

As a result of rapid technological advancements in the mobile telecommunication industry, many firms have set their strategies to target larger customer bases since it forecasts extensive future profit generation. Due to severe competition, while employing successful customer loyalty strategies, customer locked-in strategies are also commonly used in the telecommunication industry to retain their customers within the firm. Call-clubs benefits are one of the commonly used strategies used to create local network effects in the mobile telecommunication market place. Thus, this paper targets to provide insight on the implication of subscriber’s involvement in call-clubs on their loyalty towards service providers. A survey based quantitative approach was followed for this study and the data was gathered through a structured off-line questionnaire from randomly selected mobile users in Sri Lanka. Based on collected valid responses, analysis was carried out to answer the designed research hypotheses and structural equation modelling techniques were mainly used for statistical analysis. As per the analysis, research model shows a fairly high level of explanatory power with customer loyalty and perceived call-clubs benefits which indicate customers′ preference towards the service provider when most frequently contacting parties are using the same network. Further analysis was carried out to investigate the moderating effect on call-clubs benefits and customer loyalty relationships due to two main technological advancements; namely, Internet based voice calling facility and multiple connection access facility. Based on the analysis results recommendations were made to track the value of call-clubs strategies accordingly.