THE EFFECTS OF SERVICE INNOVATION AND SERVICE QUALITY ON CUSTUMER’S LOYALTY IN SMALL SERVICE ENTERPRISES

Abstract

The research aims to determine the impacts of service innovation and service quality towards customer loyalty in small service enterprises focusing on car care business in Bangkok. The research methodologies employ both qualitative research method using individual-depth interview and quantitative research method using questionnaire survey. Research results from individual-depth interview of 23 customers confirm theoretical framework of this study which is based on customer satisfaction theory. The results of quantitative analysis of 450 respondents observed from car care customers using Structure Equations Model (SEM) also confirm the theoretical framework of the study. Service innovation and service quality have positive impacts on the perceived value, customer satisfaction and customer loyalty. Although direct impact of service innovation may seem to be small, the total impact, including direct and indirect impacts, of service innovation have the highest impacts on customer satisfaction and customer loyalty. Accordingly, this implies that car care service providers should improve their service quality through the invention of service innovation in order to enhance customer loyalty, which can help building up their sustainable competitive advantage to compete in today high competitive and aggressive market.