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EFFECT OF THE ADOPTION OF EASY PAY BILL PAYMENT STRATEGIES ON

CUSTOMER SATISFACTION IN KENYA POWER AND LIGHTING COMPANY:

CASE OF KITALE MUNICIPALITY

BY

ALEX KUYA AMBOKO

SBE/MBA/75/08.

A Research Project, Submitted in Partial Fulfillment of the requirements for the degree of

Master in Business Administration

SCHOOL OF BUSINESS AND ECONOMICS

MOI UNIVERSITY

OCTOBER , 2009





DEDICATION

This research is dedicated to God for His Mercies and Grace are sufficient

for me, my wife Phyllis and son Evans, for their love ,care and

inspiration, my parents Evans and Grace for being my pillars of strength

and brothers and sister for their moral support.

May God bless you abundantly?

2



ACKNOWLEDGEMENT

I am grateful to my academic guardians Mr. T. K. Cheruiyot and Mrs. L. Maru for their

tireless effort in ensuring that my work was successful. Their advice and guidance has been

an integral tool in the completion of this work.

I am also indebted to my parents and brothers for their moral support during my MBA

studies.

I am greatly indebted to my wife and child for loving, caring and enduring my long

absence from home.

Lastly I thank the Almighty God for His love, care and protection.

3



ABSTRACT

Kenya Power and Lighting Company in its endeavor to improve on their customer

satisfaction levels and service delivery, developed a marketing strategy called the EasyPay

bill payment in early 2000.The main aim was to increase customer convenience through the

increasing of bill payment centers options available to the customer, with the help of

modern information and communications technology (ICT) With the threat of competition

increasingly becoming a reality, customer- oriented strategies that focus on customer

satisfaction and thus retention are the focus of the company’s’ competitive strategies. The

purpose of this study was to carry out an assessment of the effect of Easy Pay customer

oriented strategy on customer satisfaction. The specific objectives of the study were to

evaluate the customers’ perception and effectiveness of the KPLC “Easy Pay” bill paymentconcept. The study also seeks to establish whether or not the EasyPay ICT strategies

enhance customer satisfaction, and finally to determine the relationship between customer

level of education and adaptation of the Easy Pay bill payment options

.

An exploratory survey research design was used in the study. The sample comprised of

150 customers in Kitale Municipality. Primary data was collected using questionnaires and

personal interviews. Secondary data was sought from industry and professional

publications. Data was analyzed using descriptive statistics and presented in frequency and

percentage tables and graphs.

The study also found out that the Kenya power and lighting company has not adequately

and effectively marketed the Easy pay bill payment strategy, and that proper marketing and

increased utilization of the same can indeed increase the customers’ satisfaction levels.

The study recommends that the company should put more effort in sustained customer

education campaigns and concentrate on a fewer well equipped and dedicated pay centre’s.

4



ACRONYMS

KPLC – Kenya Power and Lighting Company Limited.

ICT – Information Communication and Technology

5





TABLE OF CONTENTS

Declaration………………………………………………….….….….…….……………..ii

Dedication……………………………………………………….…...………….………..iii

Acknowledgement………...………………….…………………………………………..iv

Abstract…………………………………………………………………..………………..v

Acronyms……………………………………………………………………………..….vi

Defination of terms……………………………………………………………………...vii

Table of contents……………………………………………………………………….viii

List of Tables ……………………..……………………………………………………xii

List of Figures …………………………………………………………………………xiv

CHAPTER ONE: Introduction……..……………………………………....……………..1

1.0 Overview………………………………………………………………....……………1

1.1 Background of the study…………………………………………………..…………..1

1.1.1. Drivers of Customer Satisfaction Strategy in KPLC………………...….………….3

7



1.1.1.1 Human Resources Strategy ……………………………………..

………….....…..3

1.1.1.2. Information Communication Technology (ICT)

Strategies………………………4

1.1.1.3. Market Development Strategies…………………………………….

…………….5

1.1.1.4. Strategic Business Units…………………………………………….

……………6

1.1.1.5. Customer Satisfaction survey……………………………………….

……………7

1.2 Statement of the Problem……………………………………...………………………8

1.3 Objectives of the Study……………………..

………………………………………..11

1.3.1 General Objective……………………………………...…………………………..11

1.3.2 Specific Objectives……………………………………………….………………..11

1.3 Research Hypothesis……………………………………………….……………….12

1.5. Significance of the study…………………………………………………………….12

1.7 Scope of the study…………………………………………………..………………..12

CHAPTER TWO: Literature Review………….……………………………………….13

2.1 Introduction…………………………………………………………..……………..13

2.2 Concepts of customer satisfaction………………………………………...…………13

2.3 Main Benefits of Customer Satisfaction………………………………..……………14

2.3.1 Customer Satisfaction Statistics………………………………………...………..15

8



2.4. Customer Expectations of Service Quality Delivery…………………….…...……..15

2.4.1. Customer Satisfaction Illusion and Trap…………………………………………16

2.4.2.Strategic Quality Management and Customer Satisfaction…….………………….17

2.4.3. Measuring Customer Satisfaction……….………………………………….……18

2.4.4. SEVQUAL Model In Relation To Customer Satisfaction……………...………19

2.4.5.Consumer Decision-Making Process………………………………………...……24

2.5.Understanding Customer Needs………………………………………….………….28

2.5.1 Strategic Customer Satisfaction………………………….………………………28

2.5.2.The Relationship of Customer’s satisfaction to Strategic Decision……...…….…..29

2.5.3. Customer satisfaction model………………………………………………..……..31

2.6.Strategic Management And Organizational Success…………………….……..33

2.7.The Conception Framework……………………………………………...…….33

CHAPTER THREE: Research Methodology…..……..…………………………………35

3.1 Introduction…………………………………………………………………………..35

3.2 Research Design…………………………………………………….….…………….35

3.3 Target Population…………………………………………………….………………35

3.4 Sample size and Sampling Techniques………………………………..……………..36

3.4.1 Sampling techniques……………………………………………………………….36

3.4.2 Sample size……………………………………………………….………………..36

3.4.3 Sampling Procedure……………………………………………………………36

3.5 Data Collection Instruments…………………………………………………………37

3.5.1 Questionnaire………………………………………………………..……………..37

9



3.6 Data collection procedure………………………………..…………………………..38

3.7 Validity and reliability of research instruments……………………….……………..38

3.8 Data analysis and Presentation ………………………………………………………39

3.9. Limitations of the Study……………………………………………………..………39

CHAPTER FOUR: Data Analysis, Presentation and Interpretation…..….……….…….40

4.0 Introduction…………………………………………………………..………………40

4.1 Customer Category…………………………………………………………………..40

4.2 Respondents occupation………………………………………….…………………..41

4.3 Respondents Monthly income………………………………………..………………42

4.4 Receiving of electricity bills regularly……………………………………………….42

4.5 Means of Getting Bills………………………………………………...……………..43

4.6 Evaluation of the KPLC response to enquiry…………………………..……………44

4.7 Awareness of KPLC bill payment options………….………………………………..45

4.8 Bill payment options utilized………………………………………………...………46

4.9 Rating the KPLC bill payment initiatives in terms of efficiency levels……….…….47

4.9.1 Barclays bank……………………………………………………………...……….47

4.9.2 Standard Chartered…………………………………………………………………48

4.9.3 Efficiency of Mpesa payment center………………………………………………49

4.9.4 Efficiency of KPLC banking halls……………………………………..………….49

4.10 Prefer paying bill at KPLC offices……………………………………..…………..50

4.11 Lack of trust in the current technology…………………………………………….51

4.12 Scanty information of the KPLC bill payment options…………………..………..52

4.13 Opening of more offices by KPLC………………………………..………..……..53

10



4.14 Increase of customer convince due to introduction of the payment options….…....54

4.15 Customer’s have no excuse for non-payment…………………………………...….55

4.16 The electricity bill payment can accommodate all level of income…………….…..56

4.17 Areas that have KPLC offices nearby are served better than out flung areas……..57

4.18 KPLC should fully roll out pre-paid meters…………………………….………....57

CHAPTER FIVE: Summary of Findings, Conclusions and Recommendations……….61

5.0 Introduction……………………………………………………………..……………61

5.1 Summary of Findings…………………………………………………...……………61

5.2 Conclusions……………………………..……………………..……….…………….63

5.3 Recommendations…………………………………………………..….…………….65

5.4 Recommendation for further research……………………….………………………65

REFERENCES………………………………………………………..…………………67

APPENDICES………………………………………………...…………………………70

LIST OF FIGURES

Fig 1.1: Overall satisfaction with KPLC customer service – Commercial ………….……7

Figure 1.2: Overall satisfaction with KPLC customer service – Domestic users…………8

Figure 2.1. SERVQAL Model………………………………………………….………..23

Figure 2.2: Consumer decision making process……………………………...…………24

Figure 2.3: Kano’s customer satisfaction model………………………………………..32

Figure 2.4: Conceptual framework of the effect of Easy Pay bill payment

strategies on Customer

Satisfaction………………………………………………………...………….34

Figure 4.1: Prefer paying bill at KPLC offices ………………………………………….51

11



Figure 4.2: KPLC should open more offices…………………………………………….54

LIST OF TABLES

Table 3.1 Customer sample size……………………………………………....…………36

Table 4.1 Customer category…………………………………………………….………40

.Table 4.2 Respondents occupation…………………………………………...…………41

Table 4.3 Monthly Incomes…………………………………………………….………..42

Table 4.4 Receiving of electricity bills regularly……………………………….………..43

Table 4.5 Means of getting bills……………………………………………...………….44

Table 4.6 Evaluation of the KPLC response to enquiry…………………………………45

12



Table 4.7 Aware of KPLC bill payment………………………………………..………..46

Table 4.8 Bill payment options utilized…………………………………...……………..47

Table 4.9 Barclays bank……………………………………………………...…………..48

Table 4.10 Standard Chartered………………………………………………..…………48

Table 4.11 Efficiency of Mpesa payment center…………………………….…………..49

Table 4.12 Efficiency of KPLC banking halls……………………………..……………50

Table 4.13: Lack of trust in the current technology………………………….………….52

Table 4.14 Have scanty information of the KPLC bill payment options……….………..53

Table 4.15: Increase of customer convince due to introduction of the payment

options………………………………………………………………………..…………..55

Table 4.16: Customer’s have no excuse for non-payment……………………...………..55

Table 4.17: The electricity bill payment can accommodate all level of income

earners……………………………………………………………………………………56

Table 4.18: Areas that have KPLC offices nearby are served better than out flung

areas………………………………………………..………….…………………………57

Table 4.19: KPLC should fully roll out pre-paid meters…………...……………………58

Table 4.20: Chi-square tests customers’ perception and Easy Pay bill payment

concept…………………………………………………………………………………...60

Table 4.21: Chi-Square of personal characteristics and adaptation of the Easy pay bill

payment…………………………………………………………………………………61

13



CHAPTER ONE

INTRODUCTION

1.0 OVERVIEW

This chapter provides a basis for the study, in that it covers the background of the study,

statement of the problem, purpose of the study, the research objectives and questions,

significance of the study as well as the scope and limitations of the study

1.2 Background of the study

14





The Kenya Power and Lighting Company (KPLC) is responsible for the transmission,

distribution and marketing of electricity throughout Kenya. Over the last three years the

company has developed and implemented prudent business strategies which have resulted

in improved quality of supply, network expansion, increased customer base and reduction

in system losses. In order to improve on the gains achieved so far, additional efforts must

be made to increase value and customer service quality. One of the key strategies being

implemented is customer satisfaction which will translate into market share growth,

increased energy sales, thus increased revenue and profitability for the company.

Faced with energy increasing competitive environment, growing economy, threat of entry

of direct competitors into the market, ever stretching targets set by the government and

ministry of Energy, and a more enlightened customer who is increasingly demanding

quality service, KPLC has no choice but to address the issue of customer satisfaction in

order to appease the customer, improve profitability and create loyalty. It is with this in

focus that KPLC introduced the “EasyPay” Bill payment strategy with a view of

increasing customer convenience and reducing incidences of customers being disconnected

from supply due to non- payment of electricity bill.

1.1.1. Drivers of Customer Satisfaction Strategy in KPLC

16



KPLC has adopted a five pillar strategy which drives its customer satisfaction

strategy. The company focuses on its Human resources, ICT, Adaptation of Market

driven strategies, strategic business units and carrying out periodic customer

satisfaction surveys. The combinations of these factors are projected to lead to

increased customer satisfaction and loyalty thus ensuring a sustainable and

profitable future for the organization.

1.1.1.1 Human Resources strategy

KPLC recognizes the fact that Human Resources are the greatest assets to any organization.

The company carries out regular employee satisfaction and overall business enhancement

strategy. The company continues to invest in its human capital through comprehensive staff

training and development programs. Through these programs, employees have been

exposed to industry best practices, which have improved the skill base and enhanced

productivity and quality of work. Performance contracts have been implemented and

targets are reviewed regularly to align them to changing business trends and expectations.

1.1.1.2. Information Communication Technology (ICT) Strategies

The company’s investments in modern information technology systems and processes are

firmly routed in the business strategy. ICT has enabled the company meet customer needs,

plan on expansion strategies and to build value into services offend by the company.

Programs like Integrated Customer Systems (ICS), Design Customer Systems (DCS), have

been designed to enable quick and easy access to and follow –up of customer job flow and

to increase efficiency in delivery of customer oriented services.

17



The ICT strategies have also enabled the company to outsource bill payment services to

various agents like Postal Corporation of Kenya, Safaricom, Zain, Barclays Bank, Equity

Bank etc., whose systems are interlinked with the KPLC systems and thus increase the

customers’ convenience in Pay point options and decongest the KPLC banking halls.

Improving customer service and enhancing revenue collection has been a major concern for

the company. The following ICT initiatives, aimed at modernizing the credit metering

technology used in the firm’s commercial cycle for billing, are being undertaken:

Automated meter reading (AMR): 4000 large power customers consuming between 1000

and 7000 units are targeted. This technology will enable accurate readings of the meters

automatically at set intervals, and detection of irregularities in consumption.

Pre-paid meters: This concept of pay per usage is an exciting new concept that will enable

consumers to better manage their bills. This strategy would involve customers being fitted

with electronic meters that would provide electric energy according to the Units bought of

“Umeme Time” scratch cards.

“EasyPay” bill payment options: The companies ICT strategies have enabled the bills to

be paid at different locations country wide. All Major Banks and some Mobile telephone

companies have entered into agreement with the organization to give them partial access to

the KPLC ICT system to enable the collection of payments of electricity bills, service line

contributions, and Meter deposits. This service are developed in such a way that the

servers of the individual banks and that of KPLC are linked at a specific time daily to

allow for upload of , and transfer of payment data and relevant customer details, thus

allowing the customers transactions to be reflected in the KPLC system and increasing the

customers convenience.

18



This strategy was developed to bring services closer to the customers and reduce the

burden of having the customers traveling long distances to pay their bills at KPLC banking

hall.

The strategy has adapted a three prong approach, which involves the incorporation of

Banks (KCB, Barclays, National Bank, Equity Bank, Cooperative Bank, Standard

Chartered Bank, and Post Bank.), Mobile telephone companies (Safaricom –“Mpesa” ,

Zain – “ Zap” .) and Postal corporation of Kenya (PCK) –“Posta Pay.”

1.1.1.3. Market Development Strategies

With an annual target of 200,000 customers connected to the national grid every year

KPLC is forced to think on how to meet the customers at their very point of need in a

timely and cost effective manner. The strategies initiated include:

Stima loan: This involves the partnering of KPLC with financial institutions to extent

credit facilities to prospective customer in meeting the connectivity charges. The credit

facilities are designed in such a way that the customers are paid for connectivity charges by

the bank, KPLC connects them with electric power and the customer enjoys electricity

supply as he/she pays the loan to the bank and power bills to KPLC.

Line Network Maximization: This strategy targets connection of potential customers in

highly population density areas which are transverse by power lines. This seeks to ensure

optional industrialization of the firms’ infrastructure and ensuring reduced system losses

thus increasing supply quality to the customers.

19



New Development zones (NDZ’s): The Company will identify and construct/ expand

power lines and supply upcoming high density settlements in urban and peri-urban areas or

new development zones. The investment would be at the company’s costs and the company

would recoup its investment as the customers are connected.

1.1.1.4. Strategic Business Units

As a way of bringing services closer to the people KPLC has embarked on a branch

enhancement strategy. This is where power and authority is devolved to the branch levels.

Branches are being equipped and enhanced to attain self sufficiency and enable faster

action towards improving the speed of delivery and quality of services.

1.1.1.5. Customer Satisfaction survey

KPLC carries out regular customer satisfaction surveys to ensure that strategies developed

are in conformity to the customers’ expectations and further enhance their convenience.

According to the KPLC customer satisfaction survey (2008). KPLC scored an overall

satisfaction means of 6.9 compared to 6.2 in2006. While this may be comparatively good

the company aims at total satisfaction of at least 9.0 in the near future.

As indicated in Figure 1.1 the satisfaction level of the commercial customers were at 71.2%

in 2004, then dropped to 62% in 2006, in the last survey of 2008 the commercial customers

have exhibited a rise in satisfaction levels 68.4%.

Fig 1.1; Overall satisfaction with KPLC customer service – Commercial Customers

20



Source: KPLC customer satisfaction survey 2008.

Figure 1.2. Indicates that the level of customer satisfaction for domestic customers have

steadily been rising over the years, from 47.4% in 2004 to 69% in 2008. The survey

carried out in 2008, sought to obtain an objective assessment of the customers; the level of

satisfaction with KPLC, Perception of KPLC in terms of service quality and corporate

image, Knowledge, attitudes and practices in relation to KPLC services, Awareness and

usage of KPLC products, Needs, preferences and suggestions for improvements, Factors

hindering connectivity for potential customers, Unmet needs, and Profiles and consumption

patterns.

Figure 1.2: Overall satisfaction with KPLC customer service – Domestic users

21

6.9 6.2

4.74

01

2

3

4

5

6

78

9

10

2008 2006 2004

6.846.2

7.12

0

1

2

34

5

6

7

8

9

10

2008 2006 2004



Source: KPLC customer satisfaction survey 2008

This study was carried out on the effect Easy pay bill payment strategy on customer

satisfaction and it focused mainly on the KPLC customers within Kitale municipality. The

study targeted both domestic and commercial customers and how the easy pay bill payment

options affected their satisfaction levels.

1.2 Statement of the Problem

Organizations are increasingly interested in retaining existing customers while targeting

non-customers; John and Joby (2003). Measuring customer satisfaction provides an

indication of how successful the organization is at providing products and/or services to the

marketplace. Customer satisfaction is an ambiguous and abstract concept and the actual

manifestation of the state of satisfaction will vary from person to person and

product/service to product/service. The state of satisfaction depends on a number of both

psychological and physical variables which correlate with satisfaction behaviors such as

return and recommend rate. The level of satisfaction can also vary depending on other

options the customer may have and other products against which the customer can compare

the organization's products. Because satisfaction is basically a psychological state, care

should be taken in the effort of quantitative measurement, although a large quantity of

research in this area has recently been developed.

22

http://en.wikipedia.org/wiki/Satisfaction

http://en.wikipedia.org/wiki/Satisfaction



Berry et al (1993) defined ten 'Quality Values' which influence satisfaction behavior,

further expanded by Berry in 2002 and known as the ten domains of satisfaction. These ten

domains of satisfaction include: Quality, Value, Timeliness, Efficiency, Ease of Access,

Environment, Inter-departmental Teamwork, Front line Service Behaviors, Commitment to

the Customer and Innovation. These factors are emphasized for continuous improvement

and organizational change measurement and are most often utilized to develop the

architecture for satisfaction measurement as an integrated model. Parasuraman and Zeitham

(1987) provide the basis for the measurement of customer satisfaction with a service by

using the gap between the customer's expectation of performance and their perceived

experience of performance. This provides the measurer with a satisfaction "gap" which is

objective and quantitative in nature. Cronin and Taylor proposes the

"confirmation/disconfirmation" theory of combining the "gap" described by Parasuraman,

Zeithaml and Berry as two different measures (perception and expectation of performance)

into a single measurement of performance according to expectation. According to Garbrand

(2002), customer satisfaction equals perception of performance divided by expectation of

performance.

Kenya Power and Lighting Company enjoy a monopoly of transmission and distribution of

electrical energy in Kenya. Currently, total connection of customers to the grid is only

15% of the potential population (Internal auditors report, May 2006). The gazettement of

Kenya Transmission co. Ltd, a company whose mandate is to build, own and maintain

transmission lines across the country, sets the stage for entry of competitive forces in the

electrical; energy distribution sector.

23



In today’s competitive markets, companies are often differentiated less by the types of

products or services they produce than by their customer satisfaction levels. Customer

loyalty is a major contributor to sustained profit growth. KPLC has thus adopted and

developed customer oriented strategies in the aim of increasing growth and profitability.

The Easy bill payment strategy was developed to increase customer convenience and

reduce conflict with customers due to disconnections of electricity for non payment. The

strategy also enable the customer to get their bills on their mobile phones via 5551 SMS

alerts.

Despite this effort by KPLC, the highest customer satisfaction level has been an average of

69%, profitability and customer confidence have had a marginal increase of 5%. This facts

coupled by the danger of prospective competitive forces taking advantage of the

satisfaction gap to gain entry in to the market begs the question of, whether current

strategies are working. This study assessed the effects of customer oriented strategies on

customer satisfaction.

1.3. Objectives of the Study

1.3.1 General Objective

The general objective of the study was to evaluate the effect of the Easy Pay bill payment

option customer oriented strategy on the customer satisfaction in Kitale municipality.

1.3.2 Specific Objectives:

24





future researchers and academicians who may use it as a base for further research work. All

other energy sector and service industry stakeholders in the private and public sector may

utilize the findings to improve the quality of their businesses.

1.6. Scope of the study

The study focused on the Kenya Power and lighting North Rift Sub-region, Kitale

Municipality. The survey will basically examine the Easy Pay bill payment options strategy

and its effect on customer satisfaction. The study was undertaken between June 2009 and

October 2009, using a survey research design and a sample of 150 customers to be selected

through simple random sampling. Questionnaires and interview schedule research tools are

to be used.

26



CHAPTER TWO

LITERATURE REVIEW

2.1 Introduction

This chapter reviews pertinent literature based on the research question and the conceptual

framework. In presenting this literature it considers past studies done in this area. Strategies

adapted role of the customer and employees in ensuring high levels of customer

satisfaction.

2.2 Concepts of Customer Satisfaction

Customer satisfaction refers to the extent to which customers are happy with the products

and services provided by a business. Customer satisfaction levels can be measured using

survey techniques and questionnaires. Gaining high levels of customer satisfaction is very

important to a business because satisfied customers are most likely to be loyal and to make

repeat orders and to use a wide range of services offered by a business.

Studies carried out by companies like Argos and Cadburys have found very high levels of

customer satisfaction. It is not surprising because these companies emphasize market

research and marketing as the tools to find out what customers want. Knowing what your

customer wants then makes it possible to tailor everything you do to pleasing the customers

e.g. providing the goods that customers want, in the packaging that they want, in retail

outlets which are convenient to use and well placed. There are many factors which lead to

high levels of customer satisfaction including: Products and services which are customer

focused and thence provide high levels of value for money, Customer service giving

27

http://www.thetimes100.co.uk/theory/theory--why-customers-are-important--283.php

http://www.thetimes100.co.uk/glossary--services-1288.php

http://www.thetimes100.co.uk/glossary--market-840.php

http://www.thetimes100.co.uk/glossary--marketing-863.php

http://www.thetimes100.co.uk/theory/theory--establishing-customer-needs--345.php

http://www.thetimes100.co.uk/glossary--value-1490.php

http://www.thetimes100.co.uk/glossary--customer-service-345.php

http://www.thetimes100.co.uk/theory/theory--why-customers-are-important--283.php

http://www.thetimes100.co.uk/glossary--services-1288.php

http://www.thetimes100.co.uk/glossary--market-840.php

http://www.thetimes100.co.uk/glossary--marketing-863.php

http://www.thetimes100.co.uk/theory/theory--establishing-customer-needs--345.php

http://www.thetimes100.co.uk/glossary--value-1490.php

http://www.thetimes100.co.uk/glossary--customer-service-345.php



personal attention to the needs of individual customers, and After sales service - following

up the original purchase with after sales support such as maintenance and updating (for

example in the updating of computer packages).

What is clear about customer satisfaction is that customers are most likely to appreciate the

goods and services that they buy if they are made to feel special. This occurs when they

feel that the goods and services that they buy have been specially produced for them or for

people like them. This relates to a wide range of products that are designed for ease of use

and good quality finish, environmentally friendly and customized to meet the needs of

particular types.

2.3 Main Benefits of Customer Satisfaction

A satisfied customer has very many benefits to any organization. Customers tend to stay

with company longer due to a developed sense of security and loyalty.

Customers also tend to deepen their relationship with the company. Hereby the customer

relationship grows above loyalty and becomes more of a symbiotic partnership.

Customers will also demonstrate less price sensitivity, due to the fact that the products and

services provided exceed the customers’ expectations and thus raising the individual

‘switching costs.’ Customers recommend company product or service to others. Word of

mouth is the greatest advertising tool in the market. Satisfied customers tend to tell others

of the benefits of the products and services received, thus marketing the organizations

products and services.

28

http://www.thetimes100.co.uk/glossary--sales-1244.php

http://www.thetimes100.co.uk/theory/theory--production-quality--339.php

http://www.thetimes100.co.uk/glossary--sales-1244.php

http://www.thetimes100.co.uk/theory/theory--production-quality--339.php



(Adapted from Gary Luck, The Ash ridge journal, Customer Satisfaction Strategy autumn

2006)

2.3.1. Customer Satisfaction Statistics

Research has shown that it costs between five to six times more to attract a new customer

than to keep an existing customer. Companies can also boost profits anywhere from 25% to

125% by retaining merely 5% more existing customer and also that happy customers will

tell to others of their positive experience, whereas dissatisfied customers tell 9 to 12 how

bad it was. It is also assumed that Only one out of 25 dissatisfied customers will express

dissatisfaction and Two third of customers do no feel valued by those serving them. Luck,

(2006)

2.4. Customer Expectations of Service Quality Delivery

Customers usually have expectation of service they should be given. If the company is to

successfully build on the relationship it has with the customers it need to understand the

customer’s expectation in order to meet them or surpass them if at all possible. While

individual customers have different expectations of the service the company should expect

that it probably will not be able to meet absolutely all of them. There will however be many

that are common to most customers and those that must be met if the company is to retain

these people and enjoy repeat customer from them. Luck (2006). The customers will have

expectations that relate to the company branches and offices they visit the staff that they

deal with and organization as all customers’ needs and wants change over time and thus the

29



organization seeking to satisfy these needs have to be dynamic and responsive to the

customer’s expectations.

Schneider and Bowen (1995) assert that “service organizations must met three key

customer needs to deliver service excellence,” Security, esteem and justice. They also

identified an array of service quality factors that are important for customers including

timeliness and convenience, personal attention, reliability and dependability, employee

competence and professionalism, empathy, responsiveness, assurance, and availability and

tangibles such as physical facilities and equipment and the appearance of personnel.

Consumers demand more transparent equitable and consumer-oriented service thus

producing a quality gap: a gulf in perceptions of quality and the impact of service on the

end user. Pallinger (2001).

Clearly defining and understanding customer satisfaction can help any company identify

opportunities for product and service innovation and serve as the basis for performance

appraisal and reward systems. It can also serve as the basis for a customer satisfaction

surveying program that can ensure that quality improvement efforts are properly focused

on issues that are most important to the customer.

2.4.1. Customer Satisfaction Illusion and Trap

What is clear about customer’s satisfaction is that customers are most likely to appreciate

the goods and services that they buy if they are made special studies carried out by

companies like Argos and Cadburys have found very high levels of customers’ satisfaction.

It is not surprising because these companies emphasize market research and marketing as

30



tools to find out what customers want knowing what customers want then make it possible

to tailor everything you do to pleasing the customers. It would be difficult to find company

that does not claim to be customer oriented, customer focused or even customer driven

enterprise. But looking closer at how the companies put their assertion into practice and

then often you would discover an array of notions and assumption that range from

superficial and incomplete to mis-guide. Wiersema (2008)

Some examples of customer satisfaction illusion include: Believing that by conducting

market survey and focus group that you know all there is to know about your customer,

believing that investing in awareness program for employees and putting customer’s

pictures on the cover of your annual report is enough to achieve customer satisfaction, and

believing that the job of the C E O is done by giving his or her direct phone number to

some valued customers. All these approaches are well intention but all of them offer at best

partial solutions to their customer satisfaction and all as a result fall short. Koterlnikov

(2008).

2.4.2. Strategic Quality Management and Customer Satisfaction

Total Quality Management (TQM) is a management style that encompasses all facts of

organizational internal and external processes. The TQM style ensures that the entire

company is working towards the same goal always. Maintain best interest of their clients.

TQM is a powerful management tool that guarantees customer satisfaction through the use

of statically tools and employee empowerment. Commitment to employees and clients and

paying close attention to both there needs is a recipe of success. Employees must

31



understand the demands of customers and respond to enquiries in a timely manner also

understanding the challenges faced by the employees in the working settling accord the

organization the opportunities to integrate new technology in order to increase quality

customer service. Koterlnikov ( 2008).

2.4.3. Measuring Customer Satisfaction

Companies may feel that the services of products they are offering are exactly meeting the

requirement of the customers they have got everything right regarding their dealings with

customer. To execute a successful client satisfaction survey an organization has to develop

one that is simple, convenient, and easy to respond to and that delivers into the types of

information that will truly help enhance your performance (Luck, 2006).

There are many reasons why the actual level of customer satisfaction that may be below

that, which the company is expecting, for example, There could be difference between the

level of service that the provider things that the customer expect and actual this customer

expect. The staff of the company may not be applying the standard as laid down by the

provider. There could be reasons for this. It could be that they are unaware of the service

standards that are supposed to be adhering to. It could be because of heavy workload or it

could be because they are dealing with changed process etc, or as time goes by customers

expectations of the service they should get will change and if the company does not

regularly monitor and modify its service standards it will soon become out of date

32



Customer’s satisfaction survey measures attributes like: How satisfied the customer felt

after the service encounter, and which aspect of the service they feel are particularly

important, Whether the service experience had left them with a more positive or more

negative feeling towards the company and if the service the customer received would make

them more likely to buy again from the provider or less likely, Which areas of the service

could be improved and what the customer expectation of the service may be in future, and

How the company can improve the service offers and what the priorities should be if there

is more than one thing that need changing, Berry, Leonard L.; A. Parasuraman (1991).

2.4.4.. SEVQUAL Model in Relation To Customer Satisfaction

The SERVQUAL method from Zeithaman, Parasuraman, and Berry (1988) is a technique

that can be used to perform gap analysis of an organizations service quality performance

against customer service quality. The model measures 10 aspects of service quality:

Reliability, Responsiveness, Competence, Courtesy, Communication, Credibility, Security,

Understanding or knowing the customer and Tangibles.

SERVQUAL is an empirically derived method that may be used by a services organization

to improve service quality. The method involves the development of an understanding of

the perceived service needs of target customers. These measured perceptions of service

quality for the organization in question, are then compared against an organization that is

"excellent". The resulting gap analysis may then be used as a driver for service quality

improvement. SERVQUAL takes into account the perceptions of customers of the relative

importance of service attributes. This allows an organization to prioritize and to use its

33



resources to improve the most critical service attributes. The data are collected via surveys

of a sample of customers. In these surveys, these customers respond to a series of questions

based around a number of key service dimensions.

The method essentially involves conducting a sample survey of customers so that their

perceived service needs are understood and for measuring their perceptions of service

quality for the organization in question. Customers are asked to answer numerous questions

within each dimension that determines: The relative importance of each attribute; a

measurement of performance expectations that would relate to an "excellent" company, and

measurement of performance for the company in question. This provides an assessment of

the gap between desired and actual Performance, together with a ranking of the importance

of service criteria. This allows an organization to focus its resources to maximize service

quality whilst costs are controlled.

The method also provides detailed information about: Customer perceptions of service (a

benchmark established by your own customers), Performance levels as perceived by

Customer comments and suggestions, Impressions from employees with respect to

customers’ expectations and satisfaction.

The SERQUAL service gaps are the difference between management perceptions of what

customers expect and what customers really do expect, the difference between management

perceptions and service quality specifications - the standards gap, the difference between

service quality specifications and actual service delivery - are standards consistently met?,

34



the difference between service delivery and what is communicated externally - are

promises made consistently fulfilled?, and the difference between what customers expect of

a service and what they actually receive. According to the model organizations have

service gaps because they do not knowing what customers expect this may be due to a lack

of a marketing orientation, inadequate upward communication (from contact staff to

management) or too many levels of management. It may also be due to adapting the wrong

service quality standards which may be caused by inadequate commitment to service

quality, lack of perception of feasibility - ‘it cannot be done’, inadequate task

standardisation or the absence of goal setting .

Developing and utilizing the wrong service quality standards may also cause service gaps

which may be cause by inadequate commitment to service quality, lack of perception of

feasibility - ‘it cannot be done’, inadequate task standardisation, or the absence of goal

setting. Another reason for the service gaps may be service performance gap, which may be

due to role ambiguity and role conflict - unsure of what your remit is and how it fits with

others, poor employee or technology fit - the wrong person or system for the job,

inappropriate supervisory control or lack of perceived control - too much or too little

control, lack of teamwork. Finally Service gaps can also occur when promises made do not

match actual delivery due to inadequate horizontal communication - between departments

or services or a propensity to over promise.

This model is important in ensuring that all activities of an organisation are focused on the

customer. For example in KPLC the SERQUAL Model can be used to ensure the EasyPay

35



bill payment and other customer oriented strategies, are in accordance with the needs and

wants of the customers and are indeed satisfying this particular needs. It captures the key

components of a customer enlightment process and informational sources that guides what

a customer expects from a service provider and compares with what the service provider

thinks the customer wants and expects form them. Thus establishing the gaps or disconnect

in the two.

Figure 2.1. SERVQAL Model

SERVQAL / GAPS MODEL

36



GAP 5

CONSUMER

PROVIDER GAP 5

GAP 1

GAP 3

GAP 2

Source: Zeithaman, Parasuraman, and Berry (1988)

2.4.5. Consumer Decision-Making Process

37

Word of Mouth

Communications

Personal needs Past Experience

Expected Service

Perceived Service

Service Delivery(including pre and post –

contacts)

Translation of

perception into Service

Quality Specs.

Management

Perception of Consumer

Expectations

ExternalCommunications

Customers



According to Kottler (2003) each time a person buys a good or service, he or she goes

through a decision making process. In some cases all six steps in figure 2.3 are utilized; in

others, only a few of the steps are employed. For example, a consumer who has previously

and satisfactorily bought luggage at a local store may not use the same extensive process as

a person who has never bought luggage.

The decision process outlined Figure 2.3 assumes that the end result is the purchase of a

good or service. However at any point in the process, a potential customer may decide not

to buy; the process then stops. A good or service may be too expensive.

Figure 2.2: Consumer decision making process

Source: Kibera (1988:14)

Kibera (1996) describes a stimulus as a cue (social or commercial) or a drive (physical)

meant to motivate or arouse a person to act. When one talks with friends, fellow employees

and so on, a social cue received. The special attribute of social cue is that it comes from an

interpersonal noncommercial source. A commercial cue is a message sponsored by a

promoting company, retailer or some other seller. Advertising, sales pictures and

organization displays are commercial stimuli. Such cues may not be regarded as highly as

38

Stimulus

Problem

awareness

Information

search

Post-purchase

behavior

PurchaseEvaluation of

alternatives



social ones by consumers because they are seller controlled. A third type of stimulus is a

physical drive. It occurs when one or more of a persons physical senses are affected,

Hunger, thirst, cold, heat, pain, or fear could cause a physical senses consumer may be

exposed to any or all three stimuli for any good or service. If aroused a consumer may

ignore the stimuli for any good or service. The need to conveniently pay electricity

connection fees and related Bills is a stimulus that needs serious consideration. At problem

awareness, the consumer is not only aroused by social, commercial and or physical stimuli,

but also recognizes that the good or service under consideration may solve a problem of

shortages or unfulfilled desire. It is sometimes hard to learn why a person is motivated

enough to move from a stimulus to problem awareness. (Kottler, 2000).

Recognition of shortage occurs when a person discovers a good or service should be

repurchased. Recognition of unfulfilled desire takes place when a person becomes aware of

a good or service that has not been consumed before or an unutilized service. People are

more reluctant to act on unfulfilled desires than on shortages. Equally customers may be

delaying to pay their electricity bills due to the long distances involved in getting to the

KPLC Banking halls or lack of sufficient information about the bill payment options.

Whether a person becomes aware of a shortage or an unfulfilled desire, he or she will act

only if it is a problem worth solving. Otherwise, the process will end. If a shortage or

unfulfilled desire merits further thought, information is sought. An information search has

two parts: Determining the alternatives that will solve the problem at hand (and where they

can be bought), and Ascertaining the characteristics of each alternative. (Karim, 1978).

Once the consumers search for information is completed, he or she must decide whether

39



the current shortage or unfulfilled desires can be met by any of the alternatives. If one or

more are satisfactory, the consumer moves to the next by any of the alternatives. If one or

more are satisfactory, the consumer moves to the next step in the decision process.

However, the consumer will discontinue the process if no satisfactory goods or services are

found.

At the Evaluation state a person ranks the alternatives under consideration from most

favorite to least favorite and selects one from the list. For KPLC customers may find the

demand attributes lacking, thus the product may be unattractive, quality service not

encouraging. Thus the development of alternative options in bill payment and service

delivery so as to ensure excellence in service delivery. After the choice of the best

alternative, the person is ready for the purchase act. This involves an exchange of money or

a promise to pay for the ownership or use of a good or service. Important decisions are still

made during this step. For KPLC this involves making the decision on whether to pay

your bill conveniently using Safaricom MPESA or Zain ZAP, or through Posta, KCB,

Equity, Co-operative Bank, Barclays, National Bank or Standard Chartered bank. Criteria

for selecting a store based retailer include such factors as store location, store layout,

customer service, sales help, store image and prices, criteria for selecting a none store

retailer include such factors as image customer service, prices, hours interactivity and

convenience. Consume will shop with the firm that has the best combination of criteria as

defined by that consumer (Cravens, 2003).

40



The KPLC systems have been integrated and thus customers can be served from any

branch countrywide. Thus the choice of Bill payment option is at the customers control and

discretion. These include the price and method of payment. Price is the amount of money a

person must pay to achieve the ownership or use of a good or service. Method of payment

is the way the price may be paid (cash, short-term credit, long –term credit).

Comparatively if the KPLC customers feel that the payment options offered by KPLC are

inconveniencing or services rendered poor, they would be unwilling to consume more

electricity and will be in frequent conflict with KPLC staff over disconnections due to non-

payment and unresolved customer queries. It may be difficult for the company to make

customers buy a service if they are unsure of when it should be delivered. The Easy Pay

bill payment options should be as available to the customers at points where the customers

an conveniently access them After buying a good or a service, a consumer may engage in

post purchase behavior. This falls into either the two categories: further purchase or re-

evaluation. In some situations, buying one item leads to further purchases and consumer

decision making continues until the last purchase is made.

The person may also reevaluate the purchase of good or service. Does it perform as

promised? Do its actual attributes match the expectations the consumer had of this

purchase? Has the retailer done as expected? Satisfaction may lead to contentment, a

repurchase when the good or service wears out and favorable conversations with friends

interested in the same item. Dissatisfaction may lead to unhappiness, brand or store

switching when the good or service wears out and unfavorable conversation with friends

41



interested in the same product the situation may lead to cognitive dissonance, a doubt

whether the right decision was made (Kottler, 2000) For electricity customers the

consumers depending on their satisfaction with the services given may decide to consume

more power by adding more electrical gadgets in their houses/ premises or cut back on

consumption. KPLC utilizes communication strategies to convince their prospective

customers that, the service on offer is safe, superior and worthy the value and encourage

the existing customers of their continued supply of safe, consistent and affordable energy.

2.5. Understanding Customer Needs

The success of a brand is dictated by its acceptance by consumers and acceptance is

dependent on whether or not the brand understands the consumer needs and fulfils them

consistently. (Schifman et al 2004). Organizations should strive to understand their

customers and devise means and products that serve to satisfy their needs and wants.

Understanding consumers help brands to rejuvenate themselves, with a new variant or new

version. An established brand has to constantly track its consumers so that it stays relevant

and valuable in the consumers’ minds. An established brand will also have to figure out

how to attract new consumers. What will make an impression and what will motivate trial

2.5.1 Strategic Customer Satisfaction

A strategic organization should endeavor to understand both the customer satisfaction

(performance) and value (importance) dimension and position them in a grid to identify

competitive advantage, threats or weakness and set action priorities for improvements

aligned with corporate objectives .Zanakis (2009).By far the biggest mistake made oven by

42



quality award-winning companies is neglecting to kink client satisfaction to client

perceived value. For example at 8t kept reporting satisfaction levels at 90% or above yet it

was loosing customers because they perceived receiving lower value. Companies confuse

satisfaction can attitude with loyalty (behavior) which requires both high value and high

satisfaction. Zanakis (2009).

Improving company perceived performance primarily in areas most valuable to its

customers is of paramount important for its continuing growth in a competitive

environment. Loyal customers spend more and are willing to pay higher price, refer new

client, and are less costly to do business with. For typical business existing customers

account for 65% of the revenue; it cost five times less to keep an existing customer happy

than finding a new one. IBM estimated that 1% satisfaction gain leads to $500 million

additional revenue in five years (Zanakis (2009).

2.5.2 The Relationship of Customer’s satisfaction to Strategic Decision

The continuous improvement in the quality of products and services offend to the market

place and the improvement in the quality / cost relationship is not transitory. Their impact

on price and demand elasticity is becoming more important on a world wide basis. Hammel

and Prahalab (1994). Johnson and petty (1995) suggest that by spending three to five

percent of operating costs on quality improvement, an organization as a potential of

spending twenty to thirty percent of the operating costs.

43



Quality conformance is not synonymous with the quality design well executed

manufacturing process can produce items that are not also customer determines the

definition and measurement of quality in dynamic environment that encompasses timely

delivery, product/service quality , failure reaction by the producer and many other market

related values that impact customer service.

Management may be in an enviable position of being able to choose between increasing

supply of increasing price or some combination of both to regulate the market. This

strategy seemed to be at work when Toyota introduced the Lexus automobile in the market.

The initial model introduced was followed by several price increases over the following

four years which resulted in almost a doubling of the base price of the automobile in

approximately four years without a decrease in demand. The implication of this view is that

at some point the customer are so pleased with their experience that they may be willing to

pay substantially increased price to have access to the products or service. Competing

products are effectively neutralized as promotional messages about that product go unheard

and perhaps unheard by customers that are pleased beyond “delight” by features that are

unnoticeable at conscious levels. (George 1996)

2.5.3. Customer satisfaction model

Kano’s (1964) customer satisfaction model distinguishes six categories which the first

three actually influence customer satisfaction.

Basic factors (Dissatisfier must have) the minimum requirements each will cause

dissatisfaction if they are not fulfilled but do not cause customer satisfaction if they are

44



fulfilled (or are exceeded) the customer regards this prerequisites and takes this for granted.

Basic factor establish a markets entry “threshold”

Excitement factors (satisfier attractive) the factors that increase the customer satisfaction

if delivered but does not cause dissatisfaction if they are not delivered. These factors

surprise the customers and generate ‘delight.’ Using these factors a company can really

distinguish itself from the competitors in a positive way.

Performance factors. The factor that cause satisfaction if the performance is high and they

cause dissatisfaction if the performance is low. Here, they attribute performance - overall

satisfaction is linear and symmetric. Typically these e factors are directly connected to

‘customers’ explicit need and desires and a company should try to be competitive here.

Kano, (1984)

The Kano model offers some insight into the product attributes which are perceived to be

important to customers. Kano also produced a methodology for mapping consumer

responses to questionnaires onto his model.

The additional three attributes which Kano mentions are: Indifferent attributes. The

customer does not care about these features. Questionable attributes. It is unclear whether

these attributes is expected by the customer, and Reverse attributes. The reverse of this

product feature was expected by the customer.

Figure 2.3: Kano’s customer satisfaction model.

Customer satisfaction

Excitement factors

45



Performance factors

Non fulfillment state of fulfilment

Basic factors

Customer dissatisfaction

Source: Kano et al (1984)

2.6 Strategic Management And Organizational Success

Strategy is the determination and evaluation of alternatives available to an organization in

achieving its objectives and mission and the selection of the alternatives to be pursued

(Byars et al 2002). Many empirical studies have been conducted to measure the

relationship of strategic management and the performances of organization. Several of

these studies support a positive relationship between strategic management and good

46



performance. A primary benefit of strategic management is the result of the process itself

as opposed to the outputs produced by the process. (Byars et al 2002). The strategic

management process forces the manager to be more proactive and conscious of their

environment.

2.7 The Conception Framework

The main variables of the study are the customer oriented strategies that KPLC has adopted

to increase customer satisfaction levels. The focus is on Easy Pay bill payment strategies.

Customers crave for convenience, as such; the Easy Pay bill payment strategies and roll-out

of convenient brands are believed to increase customer satisfaction and thus profitability.

Figure 2.4: Conceptual framework of the effect of Easy Pay bill payment

strategies on Customer Satisfaction.

Extraneous variable

47

Personal characteristics

(Age, Gender, Education level)



Independent variables: Dependant variable:

Cause Effect

Source: Survey Data, 2009

CHAPTER THREE

RESEARCH METHODOLOGY

3.1 Introduction

This chapter outlines and describes research design and methodology that the study

adopted. The chapter mainly includes description of the research design and area, study

population, sampling procedures, data collection instruments, validity and reliability of

research instruments, data collection procedures and data analysis.

48

Customer satisfaction level.

Easy pay via Commercial Banks

Easy Pay Mobiletelecommunication industry

Easy Pay PCK (Posta Pay)



3.2 Research Design

Explanatory survey research design was used during the field study to establish the effect

of Easy Pay bill payment strategies on customer satisfaction. This was preferred because it

is efficient in collecting large amounts of information, rapid data collection and provides a

stronger opportunity to understand the target population within a short time (Kothari,

2003). The design also provides description and explanation of the key variables of the

target population. The survey method was chosen as it allowed collection of large amount

of data. It is also economic and allows for standardized data hence easy analysis and

comparison. The survey method gave the researcher more control over the research

process.

3.3 Target Population

Best and Khan (1998) define the target population as any group of individuals who have

one or more characteristics in common that are of interest to the researcher. The study will

target KPLC North rift Kitale Municipality. The targeted branch has a total population of

600 customers that will form the target population.

3.4 Sample size and Sampling Techniques

3.4.1 Sampling techniques

According to Kothari (2003), 30% of a target population that is homogenous is adequate to

use as a sample in a study. A small sample can serve the purpose, “if the items of the

universe are homogeneous.”

49



3.4.2 Sample size

The selected sample consisted of 180 customers, this being 30% of the customers

Table 3.1. Customer sample size

CATEGORY OF

CUSTOMER

POPULATION SAMPLE

SIZE

PERCENTAGE OF

SAMPLE

NORMAL CUSTOMERS 600 180 30%

Source: Survey Data, 2009

3.4.3 Sampling Procedure

Probability sampling (Purposive sampling) strategy was used to arrive at the sample. This

is where the researcher decides who to include in the sample. Probability sampling is

advantageous because the researcher selects typical and useful cases only and saves time

and money. This ensured that the researcher selects a reasonable number of respondents,

which provided adequate representation and captured variations of the target population.

The study applied stratified sampling technique to select customers’ sample. Stratified

sampling involves identifying subgroups in the population and their proportions and select

from each subgroup to form a sample. The method ensures equitable representation of the

population. From the target population 30% of them will be considered as the sample.

Table 3.1 above explains how the sample was arrived at.

This technique involves selecting every K th case of the population to be included in the

50



sample from a randomized list (Mugenda 2003). The researcher used a sample frame of

registered customers from the KPLC customer database. After randomizing the list a

sample interval was computed and was used to select the K th case.

3.5 Data Collection Instruments

In collecting data the researcher used questionnaires, interview schedule and an observation

guide.

3.5.1 Questionnaire

The researcher preferred to use questionnaires in carrying out the research because they

have the ability to reach a large population. Kerlinger, (1978), argues that questionnaires

are efficient as a research tools because the researcher is likely to obtain personal ideas

from a respondent. All questionnaires had open and closed ended questions. The

researcher took precaution in constructing good questions. The questionnaire contained

questions and statements aimed at obtaining information from customers about problems

that they are encountering and their levels of satisfaction and awareness levels of branch

enhancement programs.

The data was collected via self administered questionnaires from the sampled individual

customers. The rationale for adopting the technique is the belief that the customers are

literate and those not literate were assisted to fill in the questionnaires. Time and financial

constraints may not allow for complete enumeration.

51



3.6 Data collection procedure

With the assistance of the research aide, the researcher personally administer the research

instruments after a prior visit that assisted in refining timings of interviews and distribution

of questionnaires. The pre -test visit would provide a rough picture of the expectations.

3.7 Validity and reliability of research instruments

To ensure validity and reliability of the research instruments the researcher took the

following measures

(i) Randomization

The customers were randomly selected. This guaranteed an adequately

representative sample.

(ii) Elimination of the extraneous variables

The researcher ensured that the questionnaire and interviews were administered

in absence of noise, interruptions and chose the right weather in the

administration

(iii) Use of experts

Experts from Moi University and other institutions were extensively consulted

and their opinion and suggestions incorporated in modification and polishing the

research instruments.

52



3.8 Data analysis and Presentation

The data obtained from the questionnaires was coded, organized analyzed and presented

using descriptive statistics including frequency tables, bar graphs and percentages. The

methods ensured easy understanding of presented data and information

3.9. Limitations of the Study

This study encountered the following limitations

1 Suspicion

The respondents were reluctant and highly suspicious of the researcher’s purpose and most

thought they were being investigated. It took the researcher a lot of time and persuasion to

convince respondents, consequently the research process took longer than expected.

2. Costs

The costs involved in carrying out this study were very high and given the researchers

limited funds. These costs are in terms o actual financial costs and time.

53



CHAPTER FOUR

DATA ANALYSIS, PRESENTATION AND INTERPRETATION

4.0 Introduction

This chapter presents the findings of the study based on the responses to the items in the

questionnaires. The study, which focused on the effect of the EasyPay bill payment

strategies on customer satisfaction, had a sample of 180 customers of Kenya Power and

Lighting Company. Out of the 180 questionnaires issued, the researcher received 150

questionnaires, which was a return rate of 90%. This was considered adequate for data

analysis and relevant to the study.

4.1 Customer Category

The study had to find out the category under which the Kenya Power and Lighting

belonged to. Results showed that the majority of the respondents 73.3% were small

domestic customers while only 26.7% were small commercial customers. The results

reveal that most of the sampled population (KPLC customers) used electricity for domestic

purposes (110 of 150) as compared to commercial usage (40 of 150). Thus the need to

enhance focus bill payment strategies that will fully capture the appropriate customer

cadres.The results are shown in Table 4.0 below.

Table 4.1 Customer category

Category Frequency Percent

Small domestic customers

110 73.3Small commercial customers 40 26.7

Total 150 100.0

Survey data (2009)

4.2 Respondents Occupation.

54





Table 4.3 Monthly Incomes

Frequency Percent

Less than shs. 5000 8 5.3

Shs. 5000-10,000 52 34.7

Shs. 10,000-20,000 5 3.3

Shs. 20,000-40,000 85 56.7

Total 150 100.0

Survey data (2009)

4.4 Consistency of Monthly Bills Receipt

The study sought to find out if the sampled population received their bills regularly.

Results are shown in the Table 4.3. The findings show that most of the customer’s of

Kitale municipality 73.3% received their bills regularly, 17.3% did not receive their bills in

time while 9.3% did not respond to the question. The results reveals that only few of the

customer’s did not receive bills in time or regularly, this could be so due to the means of

which they received their bills.

Table 4.4 Consistency of Monthly Bills Receipt

Frequency Percent

No response 14 9.3

Yes 110 73.3

No 26 17.3

Total 150 100.0

Survey data (2009)

56





fair, 16.7% said that it was good, 7.3% were of the opinion that the response was very good

while 4.7% of the respondents said that their response towards enquiry in KPLC in Kitale

Municipality was fair.9.3% of the customers did not respond to the question while 4.7% of

the customers felt that the company’s’ response to their enquiries were poor. This shows

that majority of the customers are satisfied with the response rate and manner that KPLC

staff and related agents handled their enquiries towards various issues.

Table 4.6 Evaluation of the KPLC response to enquiry

FrequencyPercent

No response 14 9.3

Very good 11 7.3

Good 25 16.7

Fair 93 62.0

Poor 7 4.7

Total 150 100.0Survey data (2009)

4.7 Awareness of KPLC bill payment options

From the Table 4.6 below it is seen that the majority of the respondents 35.3% were aware

of the KPLC banking halls as a bill payment centre, 16.7% were aware of Mpesa as a

means of bill payment, 15.3% were aware of Barclays bank, 13.3% Equity bank, 10.7%

knew about Standard Chartered bank while only 5.3% knew about Cooperative bank.

58



Table 4.7 Awareness of KPLC bill payment options

FrequencyPercent

Standard chartered 36 10.7

Barclays bank 23 15.3

Equity 20 13.3Cooperative 8 5.3

Mpesa 25 16.7

KPLC banking halls 33 35.3

Total 150 100.0

Survey data (2009)

4.8 Bill payment options utilized

Findings in table 4.7 below shows that the KPLC banking halls are the mostly utilized bill

payment centres with 37.3% of the customers having utilized them, 25.3% of the

respondents utilized Mpesa, 22.0% Barclays bank , 10.7% Standard chartered bank while

only 4.7% of the customers felt that Equity bank as a bill payment option was also utilized.

The results reveal that most of the sampled population KPLC banking Halls are the most

utilized bill payment centre’s as compared to other payment modes.

59



Table 4.8 Bill payment options utilized

Frequency Percent

Standard chartered 16 10.7

Barclays bank 33 22.0

Equity 7 4.7

Mpesa 38 25.3

KPLC banking halls 56 37.3

Total 150 100.0

Survey data (2009)

4.9 Rating the KPLC bill payment initiatives in terms of efficiency levels

4.9.1 Barclays bank

On finding out the efficiency of Barclays bank, results shows that 56.7% of the respondents

said that Barclays bank as a bill payment center was effective, 23.3% said that it was

moderately effective, 16.7% said it was not effective while only 3.3% said that it was least

effective. The result implies that customer’s who used Barclays bank center in paying their

bills felt it was effective in bill payment.

The Table 4.9 below shows findings on the efficiency of Barclays bank

Table 4.9 Barclays bank

Frequency Percent

60



Least effective 5 3.3

Not effective 25 16.7

Effective 85 56.7

Moderately effective 35 23.3

Total 150 100.0

Survey data (2009)

4.9.2 Standard Chartered

On finding out the efficiency of the Standard Chartered bank, the majority 54.7% of KPLC

customer’s said that Standard Chartered bank payment center was effective in carrying out

transactions, 23.3% moderately effective while only 22% said that the payment center was

not effective. Result reveals that Standard Chartered bank as bill payment center was

effective in their transactions

Table 4.10 Standard Chartered

Frequency Percent

not effective 33 22.0effective 82 54.7

moderately effective 35 23.3

Total 150 100.0

Survey data (2009)

4.9.3 Efficiency of Mpesa payment center

Mpesa as a payment center was also looked at to find out on its effectiveness in carrying

out its effectiveness in carrying out it’s transactions of KPLC bill payment, results shows

that the majority of the customer’s 58.7% said Mpesa was not effective, 20.0% effective

19.3% moderately effective while only 2.0% said that it was effective. Looking at the

results, it is revealed that though Mpesa is used, customers find it to be ineffective in it’s

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transactions. This might be due to lack of understanding of technology thus customer’s do

not even try to use it since it is new to the market.

Table 4.11 Efficiency of Mpesa payment center

Frequency Percent

not effective 30 20.0

effective 88 58.7

moderately effective 29 19.3

very effective 3 2.0

Total 150 100.0

Survey data (2009)

4.9.4 Efficiency of KPLC banking halls

KPLC banking halls were as looked at on how they performed or carried out their

transactions. From the findings below 67.3% of the respondents said that KPLC banking

halls were effective in their operations, 16.0% said that they were moderately effective,

while 16.7% said the KPLC banking halls were not effective, these results reveal that

customer’s of KPLC find, KPLC banking halls to be effective in their transactions.

Table 4.12 Efficiency of KPLC banking halls

Frequency Percent

Not effective 25 16.7

Effective 101 67.3

Moderately effective 24 16.0

Total 150 100.0

Survey data (2009)

4.10 Prefer paying bill at KPLC offices

The researcher sought to find out if customer’s of Kenya Power and Lighting Company pay

their bills at the KPLC offices, From the chart below it is shown that 43.3% of the

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customers of KPLC agreed that they preferred paying their bills at KPLC offices, 38.0%

strongly agreed, 9.7 of the sampled population were undecided while 9.4% strongly

disagreed. Putting strongly agreed and agreed together 81.3% of the total respondents are

of the idea that they prefer paying their bills at KPLC offices. Results are shown in the pie

chart below

Figure 4.1: Prefer paying bill at KPLC offices

Survey data (2009)

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4.11 Customers view on modern bill payment technology

The table below shows finding on KPLC customer’s view of current bill payment

technology. Findings shows that most of the respondents wee undecided on whether they

lacked trust in the current technology or not, 18.7% strongly agreed that they did not have

trust in the current technology while 20.7% said that they had trust in the technology

(disagreed). Those findings implies that the majority of the respondents who were

undecided either did not understand the technology on the market or they had not carried

out any transactions with the current modes of technology on the market how.

Table 4.13: Lack of trust in the current technology

Frequency Percent

Strongly agree 28 18.7

Agree 39 26.0

Undecided 52 34.7

Disagree 31 20.7

Total 150 100.0

Survey data (2009)

4.12 Scanty information of the KPLC bill payment options

Results shown below shows response on if customer’s had scanty information on the

KPLC bill payment options

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Findings below shows that the majority of the customer’s 54.7% were undecided if they

had scanty information on the bill payment bills, while 12.7% also agreed that they had

scanty information on the options. The results here might imply that though 54.7% of the

respondents were undecided putting strongly agree and agree together (45.3%) still is a

strong percentage which might bring out argument that the customer’s who were undecided

surely had scanty information on the pay bill payment options. Thus concluding that the

customers need to be informed on the offer options of bill payment.

Table 4.14 Have scanty information of the KPLC bill payment options

Frequency Percent


Agree 19 12.7

Undecided 82 54.7

Total150 100.0

Survey data (2009)

4.13 Opening of more offices by KPLC

The KPLC customer’s were asked if it was good for the KPLC to open more offices to

collect payments. The bar graph shown below shows the results. The results show that

30.0% strongly agreed that more offices to collect payments should be opened else where

near customers to collect payments, 40.7% agreed, 19.3% of the sampled population were

65



undecided while only 4.7% disagreed. Those findings imply that the KPLC customers

would the company to open more payment offices so as to ease payment and reduce

congestion.

Figure 4.2: KPLC should open more offices

Survey data (2009)

4.14 Increase of customer convince due to introduction of the payment options

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Further it was important for the study to find out if customer convince had increased due to

introduction to pay options. It is seen from the Table below that 46.7% of the respondents

strongly agreed that there is customer, convince due to new introduction of payment

options, 48.7% agreed while only 4.7% of the respondents were undecided. Putting

strongly agree and agree together (95.4%) results implies tat there is satisfaction of

customer’s that introduction of bill payment options have been convenient. Below is the

table showing the results

Table 15: Increase of customer convince due to introduction of the payment options

Frequency Percent

strongly agree 70 46.7

agree 73 48.7

undecided 7 4.7

Total 150 100.0

Survey data (2009)

4.15 Customer’s have no excuse for non-payment

The researcher also had to find out if the KPLC customer’s had any excuse for non-

payment of bills. The findings below shows that 50.7% of the customer’s strongly agreed

that customer’s had no excuse for non payment of electricity bills, 36.7% agreed that no

excuse while only 10.7% of the respondents were undecided. The results reveals that

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customers were in agreement that due to introduction of payment options there was no

excuse of one not paying electricity bills for the reason of congestion.

Table 16: Customer’s have no excuse for non-payment

Frequency Percent

No response 3 2.0


Agree 55 36.7

Undecided 16 10.7

Total150 100.0

Survey data (2009)

4.16 The electricity bill payment can accommodate all level of income earners

Table 16 below shows that 34.7% of the customer’s agreed that the program can

accommodate all levels of income customer’s 24.7% strongly agreed, 24.0% were

undecided while only 7.3% strongly disagreed. The small percent of strongly disagreed

reveals that with the introduction of the payment programs all levels of income customer’s

can be accommodation in the program.

Results on the accommodation of all levels income earners are shown below:

Table 17: The electricity bill payment can accommodate all level of income earners

Frequency Percent

No response 14 9.3


Agree 52 34.7

Undecided 36 24.0

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Strongly disagree 11 7.3

Total150 100.0

Survey data (2009)

4.17 Areas that have KPLC offices nearby are served better than out flung areas

On finding out if areas that had offices nearby were served that had offices nearby were

served better than out flung areas customer’s strongly agreed 52.7% that it was true that

areas that had KPLC offices nearby were served better 36.7% agreed and only 10.7% of the

customer’s were undecided the results reveals that the nearer the offices the better the

service the results still raises more questions about KPLC service

Table 18: Areas that have KPLC offices nearby are served better than out flung areas

FrequencyPercent


Agree 55 36.7

Undecided 16 10.7

Total 150 100.0

Survey data (2009)

4.18 KPLC should fully roll out pre-paid meters

As long as we can remember KPLC has been using pre-paid meters in billing; therefore the

researcher had to find out if customers were comfortable if the prepaid meters were rolled

out. Findings shows that the majority 48.7% strongly disagreed that prepaid meters should

be rolled out, 14.7% were undecided while 18.0% disagreed findings reveals that still

customers prefer the prepaid meters. This can be due to lack of knowledge on the other

options.

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Table 19: KPLC should fully roll out pre-paid meters

Frequency Percent

No response 14 9.3


Agree 73 48.7

Undecided 22 14.7

Strongly disagree 14 9.3Total 150 100.0

Survey data (2009)

Testing of Hypothesis

There is no relationship between customers’ perception and Easy Pay bill payment

concept

Hypothesis one was to test if there was any relationship between customers’ perception and

Easy Pay bill payment concept. To achieve this a chi square Test statistic was used. Chi-

square is a statistical technique used to compare the differences between categorical

frequencies when data is categorical and drawn from a population with uniform distribution

in which all alternative responses are equally likely as explained (Kombo 2003).

Chi square test in this study was used since the data collected was basically categorical of

the description of views, perceptions and attitudes of the respondents towards the pay bill

payment. It was the most suitable since it enables the researcher to establish whether there

70



are any relationships in the data of the alternative responses. Significant level of 95%

(0.05) was used below are the findings. The Pearson chi square statistic of 13.42, Degree

of freedom of 1 and the significance level of 0.00 (p<0.05) [ c2(1, N = 150) = 0.00, p < .05]

.reveals that the two variables are dependant on each other. Where customers’ perception

is influenced by Easy Pay bill payment, showing that there is a significance between

customers’ perception and Easy Pay bill payment concept, therefore we reject the null

hypothesis that states that there is no relationship between customers perception and Easy

Pay Bill payment and accept the alternate. The table below shows the results;

Table 20: Chi-square tests customers’ perception and Easy Pay bill payment concept

Value df Asymp.sig(2

sided)

Exact sig Exact Sig

(1 sided)

Pearson chi-square 13.420 1 0.000

Continuity

Correction

12.441 1 0.000

Linear by linear

association

13.361 1 0.000 0.000 0.000

N of Valid Cases 150

Significance between Personal Characteristics and Adaptation of the Easy Pay Bill

Payment.

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Hypothesis two was to test if there was any significance between personal characteristics

and adaptation of the Easy pay bill payment. Chi-square was used to achieve this, A chi-

square test is used when you want to see if there is a relationship between two categorical

variables.

A cross tabulation between level of education and Easy Pay bill payment was tested and it

showed significance/relationship on calculating the chi square to find out the relationship

between the level of education ( Personal characteristics) and Easy Pay bill a chi-square

value of 11.203 at p< 0.05 with 2 degree freedom shows that there is a positive association

which is significant, the significant level 0.001 this means that customers with high level

of education are well conversant with the easy Pay bill, than those with low education. The

table below shows the results.

Table 21: Chi-Square of personal characteristics and adaptation of the Easy pay bill

payment

dependent variable

(Easy bill payment )

Level of education Income

Value df Sig. Value df Sig.

11.203 2 0.001 22.043 2 0.005

Survey data (2009)

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CHAPTER FIVE

SUMMARY OF FINDINGS, CONCLUSIONS AND RECOMMENDATIONS

5.0 INTRODUCTION

This chapter presents the summary of the findings, the conclusions and recommendations

to policy makers and potential researchers

5.1 Summary of Findings

The study was set out to evaluate the effect of Easy pay bill payment option customer

oriented strategy on the customer satisfaction in Kitale municipality. This was done by

evaluating the customer’s perception towards the KPLC “Easy Pay” bill payment concept,

assessing the effectiveness of the KPLC’s Easy Pay Easy Pay bill payment options.

Likewise, the study sought to establish the adoption level of the Easy Pay bill payment

option among the customers and finally the study sought to determine the relationship

between personal characteristics and adaptation of the Easy Pay bill payment options.

On evaluating the customer’s perception towards the KPLC “Easy Pay” bill payment

concept. The findings revealed that majority of the sampled population received their bills

regularly. This is evidenced 73.3% received their bills regularly. The researcher further

went ahead to found out that the means of getting the bills majority 67.3% of the Kenya

Power and Lighting Company customers received their bills through monthly bill statement

and on the efficiency of the KPLC on response on the enquiry 62.0% of the customer said

that the response of KPLC on enquiry was fair.

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On the effectiveness of the KPLC’s Easy Pay bill payment options majority of the

respondents 56.7% said that Barclays bank as a bill payment center was effective, 54.7% of

KPLC customer’s said that Standard Chartered bank payment center was effective in

carrying out transactions. Also, Mpesa was also looked at to find out on its effectiveness in

carrying out it’s transactions of KPLC bill payment, results shows that the majority of the

customer’s 58.7% said Mpesa was not effective. 67.3% of the respondents said that KPLC

banking halls were effective in their operations. The researcher also sought to find out if

customer’s of Kenya Power and Lighting Company pay their bills at the KPLC offices.

Putting strongly agreed and agreed together 81.3% of the total respondents are of the idea

that they prefer paying their bills at KPLC offices.

Findings reveal that KPLC customer’s have scanty information of the KPLC bill payment

options 45.3% had scanty information on the pay bill payment options. Thus concluding

that the customers need to be informed on the offer options of bill payment. On findings

out from the respondents if it was good for the KPLC to open more offices to collect

payments, 70.7% agreed that KPLC should open more offices. Those findings imply that

the KPLC customers would the company to open more payment offices to ease payment

and reduce congestion. Further, the study found out that customer convince had increased

due to introduction to pay options. It is seen that 46.7% of the respondents strongly agreed

that there is customer convince due to new introduction of payment options and 48.7%

agreed. This implies that there is satisfaction of customer’s that introduction of bill

payment options have been convenient.

74





Mpesa was also looked at on its effectiveness in carrying out its effectiveness in carrying

out it’s transactions of KPLC bill payment it was also not effective. KPLC banking halls

were effective in their operations.

The KPLC customers preferred paying their bills at KPLC offices. KPLC customer’s have

scanty information of the KPLC bill payment options. Thus, concluding that the customers

need to be informed on the offer options of bill payment. On findings out from the

respondents if it was good for the KPLC to open more offices to collect payments it was

established that KPLC should open more offices. Those findings imply that the KPLC

customers would prefer that the company opens more payment offices to ease payment and

reduce congestion.

The study further established that customer convenience had increased due to introduction

to pay options. Thus the Easy pay bill payment options go along way towards saving the

customers time and convenience thereby avoiding time wasted in queues. More should be

done to increase the customers awareness levels through a sustained marketing campaign

It was also found that there was a significant relationship between customers’ perception

and Easy Pay bill payment concept, Where customers’ perception of KPLC and its service

offerings is influenced by Easy Pay bill payment options.

The study also found out that there was a relationship between personal characteristics and

adaptation of Easy Pay bill payment options. it found that there was a relationship

76



between the level of education, income and age ( Personal characteristics) and the adaption

of the Easy Pay bill payment options.

The study also established a relationship between the Easy Pay bill payment options and

customer satisfaction. This is mainly so because the customers’ convenience is increased

significantly, time is saved and the customers can more efficiently and effectively manage

their bill at their convenience.

5.3 Recommendations

In order to bring out the customer satisfaction in using Easy pay Bill Payment option

customer oriented strategy, it is of paramount importance for Understanding the

expectations and requirements of all the customers, determining how well your company

and its competitors are satisfying these expectations and requirements likewise developing

service and/or product standards based on the above findings, examining trends over time

in order to take action on a timely basis thus establishing priorities and standards to judge

how well you've met these goals .

A more aggressive and sustained marketing campaign need to be undertaken so as to

increase the customers’ awareness levels and understanding on the different bill payment

options. This may entail a sustained visibility campaign.

5.4 Recommendation for further research

The study focused on the effect of the Easy Pay bill payment options on customer

satisfaction. A study of the magnitude cannot be exhaustive and more research can be done

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in areas covered in the study. The study can also be replicated in other areas of the country.

The following suggestions for further research are made.

1. Factors affecting customers’ ability to pay their monthly bills.

2. The relationship between adaptation of the KPLC EasyPay bill payment options

and the customers’ education levels.

3. Feasibility studies for the different bill payment options.

4. To investigate why customers are not fully adapting the various bill payment

options.

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78



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Kenya Power & Lighting Company. (May, 2006). Audit report no. 6/2005- 6, on

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Nairobi: KPLC publication.

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Quantitative approaches. Nairobi: Acts press.

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Saleemi, N.A. and Njoroge, E.K. (1997), Marketing Simplified . Nairobi: Saleemi

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http://www.nova.edu/ssss/QR/QR4-3/winter.html

http://www.nova.edu/ssss/QR/QR4-3/winter.html



APPENDIX 11: Introduction letter

Dear Respondent,

I am a MBA (Strategic Management) student at Moi University, department of Business

Studies and this questionnaire is part of a research to be carried out in partial fulfillment of

MBA degree. The questionnaire is on the effect of customer oriented strategies on

customer Satisfaction in Kitale Municipality.

The information you provide will be held in strictest confidence and used for the purpose

of academic research and will be used for the stated purpose only. Please answer the entire

questionnaire as accurately and as honestly as possible.

Your kind assistance to facilitate this noble activity will be highly appreciated.

Thank you in advance.

Yours Faithfully,

Alex K. Amboko

SBE/MBA/075/09

82



APPENDIX I11

QUESTIONNAIRE FOR KPLC CUSTOMERS.

Name (Optional…………………………

Age………………………..Occupation………………

Residence Area…………………….. Level of Education …………………………………

1. Please indicate the customer category under which you fall.

Small Domestic Customers [ ]

Small commercial customers [ ]

2. What do you do for a living?

(a) Farming [ ]

(b) Employment [ ]

(c) Business [ ]

(d) Other, please specify_

3. What is your monthly income?

(a) Less than KShs. 5,000 [ ]

(b) KShs. 5,000 – 10,000 [ ]

(c) KShs. 10,000 – 20,000 [ ]

(d) KShs. 20,000 – 40,000 [ ]

(e) Over KShs. 40,000 [ ]

4. What is your highest completed level of Education?

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8. Are you aware of the following KPLC bill payment options/ centres?

[tick the ones that you are aware of]

a) Standard chartered [ ]

b) Barclays bank [ ]

c) Equity bank [ ]

d) Cooperative bank [ ]

e) National bank [ ]

f) Postbank [ ]

g) Mpesa [ ]

h) Zap [ ]

i) KPLC banking Halls [ ]

9. Which of following KPLC bill payment options/ centers have you utilized?[Tick the

ones that you are aware of]

a) Standard chartered [ ]

b. Barclays bank [ ]

c. Equity bank [ ]

d. Cooperative bank [ ]

e. National bank [ ]

f. Post bank [ ]

g. Mpesa [ ]

h. Zap [ ]

i. KPLC banking Halls [ ]

85





Zain Zap

Kplc Banking Halls

13. Please indicate on a scale of 1 – 5 where:

1. Strongly Disagreed - S.A

2. Disagreed - D.A

3. Undecided - Ud

4. Agreed - A

5. Strongly Agreed - S.A.

What you feel about the following statements.

S.A

5

A.

4

UD

3

D

2

S.D

1

1 I prefer paying my bill at KPLC offices.

2 I do not trust the current technology being utilized

3 I only have scanty information on the KPLC bill payment

Options.4 KPLC should simply open up more offices to collect payments

5 Customer convenience has been increased with the introduction

of the payment options

6 Customers have no excuse for non payment of electricity bill

7 The electricity bill payment program can accommodate all level

of income earners.

8 Areas that have KPLC offices nearby are served better than out

flung areas.

9 KPLC should now fully roll out pre-paid meters.

1

0

Areas with electricity infrastructure develop faster than those

without.

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Documents

Alex Mba Project 29-10-09