Abstract—Recent years have seen that a wide range of service providers have realized the importance of customer loyalty. One of the key challenges they face is how to manage service quality, which is pivotal for satisfying customers, retaining them and creating loyalty among customers. This research was conducted to examine the factors affecting Customer Satisfaction (CS) and Customer Loyalty (CL) to help improve profit for the local taxi companies of Ho Chi Minh City, Vietnam. Five dimensions in service quality (SERVQUAL): Tangibility, Reliability, Responsiveness, Empathy, and Assurance and IDCTP model: Information, Dignity, Comfort, Trip time and Price have been considered for this empirical research. The research methodology was carried out in a survey cross-sectional applied to 288 respondents. The collected data was analyzed by using reliability method, factor analysis, correlation and regression. The empirical results showed that reliability, responsiveness, price and satisfaction directly affected customer loyalty. In addition, comfort and price indirectly affected customer loyalty through the mediation of satisfaction. Finally, this study assisted marketing managers better understand the key drivers of taxi service in order to generate and uphold user satisfaction as well as fidelity in an extremely intricate marketplace. Index Terms—Service quality (SERVQUAL) dimensions, RECSA model, customer satisfaction, customer loyalty, taxi service. I. INTRODUCTION In an attempt to satisfy the basic mobility need of the individual, the demand for transport services come into play. In recent years, the taxi industry has undergone major changes. To a large extent, the changes have led to increase competition, particularly between the domestic and foreign company. Moreover, the business of transportation is developed with severe competition, fluctuations, and new challenges. With reference to this, local taxi companies are facing with the new competitors which are Uber, Grab and Easy Taxi. Nowadays, consumers become wiser and they require not only high quality but also better, more professional in service. They are used to experience famous brand with good reputation as well as good services. Meanwhile, two of the most brand awareness of Vietnamese in taxi industry are VINASUN and MAILINH being damaged the good reputation. With the population nearly 8 million people, Ho Chi Minh City — the biggest city of Vietnam, becomes the most Manuscript received March 25, 2016; revised August 3, 2016. The authors are with the International University-VNU-HCMC, Vietnam (e-mail: mnkhuong@hcmiu.edu.vn, qdai2908@gmail.com). potential market for not only domestic but also foreign company to invest. One of the key roles to succeed in taxi industry is customer satisfaction. The more satisfaction customers can get, the more profit company can earn. It is not to say that customer loyalty is not important for modern- day business. First, customers are defined as a scare resource. A purchasing from an old customer is much easier than from a new customer. The second reason is that customer loyalty has a progressive effect on the profit of the company, as confirmed empirically. Customer loyalty leads to profits with an increase in profit from cross-selling and up-selling, the gaining of new customers by word of mouth, cost reduction, and price insensitivity in the customer [1]. So as to get a high position in customer’s attention, there are several aspects to measure and one of which is customer satisfaction. In a turbulent commerce environment, in order to sustain the growth and market share, companies need to understand how to satisfy customers, since customer satisfaction play an important part for establishing long-term client relationships [2]. In addition, companies want increase the demand of taxi users to maximize their profit then they must gain as much as possible the satisfaction from customers. Therefore, customer satisfaction is a critical issue in the success of any business system, traditional or online [3]. II. LITERATURE REVIEW A. Customer Satisfaction The idea of consumer satisfaction has gained huge interest in recent times in taxi industry. For every firm, consumer satisfaction is the vital aspect that needs careful attention. This is mainly due to the increased significance of the fact that superior consumer contentment can lead to a strong position in the rivalry marketplace by means of declining price elasticity, falling business costs, lessening failure costs along with reducing the all the expenses of acquiring new consumers [4]. For consumer researchers the issue of customer satisfaction is very important [5]. According to [3], customer satisfaction is a vital consideration for all those organizations that wish to create and keep a competitive advantage in present competitive scenario. [6] identified some well establish determinants of customer satisfaction such as expectations, disconfirmation of expectations, performance, affect and equity. Customers are said to be satisfied when actual performance outcome exceeds expectation (positive disconfirmation), and dissatisfaction The Factors Affecting Customer Satisfaction and Customer Loyalty — A Study of Local Taxi Companies in Ho Chi Minh City, Vietnam Mai Ngoc Khuong and Ngo Quang Dai International Journal of Innovation, Management and Technology, Vol. 7, No. 5, October 2016 228 doi: 10.18178/ijimt.2016.7.5.678