Customer Loyalty during Disasters: The Case of Internet Service Providers Amidst Typhoon Odette in Central Philippine Urban Districts

Abstract

The impact of service disruptions to critical utility services due to natural disasters is evident during delays in emergency responses and humanitarian relief, especially for urban populations with highly interdependent infrastructures. Aside from health and social impacts, failing to address these disruptions would inevitably lead to customer dissatisfaction and switching loyalty, adversely affecting service providers’ profitability. Thus, providers must effectively respond to this service failure resulting from disruptions to retain the loyalty of their existing customers. To this end, a theoretical model to explain customer loyalty to internet service providers amidst a disaster-induced disruption through integrating customer loyalty, customer satisfaction, service quality, service innovation, service recovery, perceived value, and brand image is proposed in this work. This study uses the case of a massive disruption caused by Typhoon Odette (Rai) in central Philippine urban districts to empirically test the efficacy of the proposed structural model. A total of 584 responses were utilized in the partial least squares structural equation modeling (PLS-SEM) to derive significant relationships between the constructs. The findings suggest that customer satisfaction strongly predicts customer loyalty during a disaster. Furthermore, efforts towards service recovery do not translate to customer loyalty, but negatively influence customer satisfaction. Moreover, service innovation significantly affects customer satisfaction but negatively influences customer loyalty. Additionally, perceived value does not support customer loyalty but positively affects customer satisfaction. Lastly, brand image and service quality influence both customer satisfaction and loyalty. These findings offer managerial insights for informing the design of a reliable service recovery system, efficient project management planning, practical service innovation, and comprehensive service design. The future research directions are discussed.