Individual assignment

Customer Relationship Management

Customer Retention in Telecommunication Industry

Submitted to:
Prof. Tripurasundari Joshi

Submitted by:

Siddhant Katare 161158

M.B.A. FT II (2016-18)
Submission Date: 19th February 2018
Contents
CUSTOMER RETENTION IN TELECOMMUNICATION INDUSTRY .............................................................. 2
Introduction to CRM: .......................................................................................................................... 2
CUSTOMER RETENTION .......................................................................................................................... 2
Introduction ........................................................................................................................................ 2
Two-level model of customer retention in Telecomm industry ......................................................... 3
Customer loyalty a path to retention: ................................................................................................ 3
Retention Strategies adopted by Indian Telecom Companies ........................................................... 4
CONCLUSION:.......................................................................................................................................... 4
REFERENCES: ........................................................................................................................................... 5

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 CUSTOMER RETENTION IN TELECOMMUNICATION INDUSTRY

Introduction to CRM:
The objective of customer relationship management is to unite and join information technology
and business processes in a fashion that enables the firm to acquire new customers, to retain
existing customers, and maximize the lifetime value of its customers. Most importantly, CRM
allows firms to differentiate customer treatments based on specific customer needs and
preferences.

CUSTOMER RETENTION
Customer service starts by understanding the need of the customer, then bringing the service
or product as per their needs and taking feedback about the services, basically the main path to
retention is to make customer satisfactory about the services so that they stay loyal.

Introduction: The customer retention is a part of customer relationship management

(CRM). CRM is a business approach that seeks to create and develop relationships with
carefully targeted subscribers in order to improve the value of customers and corporate
profitability so as to maximize shareholder value. Thus, an effort by a telecommunication
organization to improve customer value will also assist in ensuring their essence of been in
business, which, of course, is to make profit. The study contributes to a better understanding
of factors, which influence customers’ retention decision in the Nigerian, Indian and US
telecommunication industry. It also identified strategies to be adopted for effective customer
retention management, which are necessary for development of the telecommunication
industry in Nigeria.
The study about the telecommunication industry reveals that promotion that are unwanted or
dubious are likely to increase the chances of customer churn by 18% approx. which is very big

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in terms of customer revenue. For the retention drivers, the study concluded that an increase in
the quality of calls provided by mobile telecom firms would increase the likelihood of
customers’ loyalty by retention. Similarly, factors associated with the quality of message
delivery also indicates that a one-grade improvement in the quality of message delivery would
increase the likelihood of loyalty by 17% approx. In addition, mobile subscribers are more
likely to be loyal to their mobile firms if internet services provided are deemed efficient. The
result also reveals that a unit increase in frequent promotion by network providers will increase
customer loyalty to network provider. However, if the billing system changes favorably to
customers, it will enhance customer retention. Moreover, easy interconnectivity, coverage, and
effective complaint management suggest some marginal effect for percentage increase in
customers’ satisfaction and enhanced customer retention.

Two-level model of customer retention in Telecomm industry

The model was proposed by US Telecomm Company which focuses on understanding the
factors related to customer retention behavior, both behavioral factors such as switching costs
and customer satisfaction and demographic factors. Main objectives are
1. how factors that affect switching costs and customer satisfaction, such as length of
association, service plan complexity, handset sophistication and the quality of
connectivity, drive customer retention behavior
2. how customer demographics such as age and gender affect their choice of service plan
complexity and handset sophistication, leading to differences in customer retention
behavior
There is both direct and indirect effect on customer retention both in terms of satisfaction and
demographic behavior. Following are the results:
 A more complex service plan is positively related to the customer retention behavior.
 Length of association of calls is positively related to the customer retention behavior.
 The connectivity quality of the telecomm provider is directly related to the customer
retention behavior.
 Customer age and gender is indirectly related to the customer retention behavior.

Customer loyalty a path to retention:

The study have added to the knowledge that while service organizations aim to gain customers
loyalty, customers, on the other hand, seek an organization’s service loyalty i.e. the assurance
of a consistent and superior quality of service as proof of the organization’s commitment to
offering superior service, for both the present and the long term. It also explains that numerous
studies have been conducted in an attempt to determine the essential nature and development
of loyalty, i.e. how organizations can create and enhance customer loyalty through products
and services. The challenge for today’s organizations is not only to reach the top, but to stay
there. If that is an organization’s aim, its primary focus should be not merely to attract
customers, but to obtain their loyalty and, thus, their patronage, not only for the present, but
also for the long term. This loyalty, however, is the end result of an on-going, long-term
relationship. Such relationships are founded on an organization’s ability to maintain and extend
its relationships with customers. The study analyzed the effectiveness of CRM on two Loyalty

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Indices which relate to the concept of Word of Mouth, Cross-selling and Up-selling. As this
paper research is confined only to two models, namely a model for Advocacy Loyalty and
Purchase Loyalty.

Retention Strategies adopted by Indian Telecom Companies

Indian companies like Airtel, Idea, and Vodafone are trying to retain their customer by
providing them with various offer. Following are the strategies Indian companies have taken:
 Airtel keeps customers more updated compare other players whereas Vodafone stands
last.
 Vodafone conducts more face to face meeting or telephonic meetings to enhance the
relationships with the customers which are less practiced in BSNL.
 More customers of BSNL are of the opinion that their phone connection will not be
disconnected without informing them where as it not so with Idea.
 Idea offers more free trials of value added services compare to others whereas Vodafone
gives less free trials.
 More number of Airtel customers feel that, their service provider takes personal care to
solve the complaints where as it is least with BSNL.
 Late payment fees can be waived off in Idea where as less number of customers feel
that their late payment fees can be waived off in Airtel.
 Airtel sends out more wishes to its customers on special occasions like birthday,
wedding anniversary and festivals where as it is less practiced in BSNL.
 Bill collection at the door step is practiced more in Airtel and least in BSNL.
 Airtel gives out more freebies to its customers where it is less practiced in BSNL.
 Vodafone gives bonus points and it is less practiced in BSNL.
 Airtel gives out more discounts on voice calls and other value added services, whereas
it is less practiced in BSNL.
Hence the opinions on the retention programs of the telecom companies found to be similar
across different occupation and income levels for all the service providers.

CONCLUSION:
Telecommunications carriers today must attract and retain customers while constantly
improving each interaction. They need to manage the lifecycle of these customers to maximize
revenue and reduce costs to increase profitability. Industry is highly competitive as its
customers have many options and offerings are hard to differentiate be it any country.
Customers although have different parameters of considering the company in different
countries but the objective remain the same and that is to have maximum value. The main
objective of retention strategy is to keep employees and customers on a long-term basis. This
means that firms need investors who share this long-term view of customers as market grows
or become competitive, firms are more likely to attempt to maintain their market share by
focusing on retaining their customers.

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 REFERENCES:
1. Izogo, E. E. (2013). An Empirical Assessment of Customer Switching Behavior in the
Nigerian Telecom Industry. African Journal Of Business & Economic Research, 8(1),
61-82.

2. Seo, D., Ranganathan, C., & Babad, Y. (2008). Two-level model of customer retention
in the US mobile telecommunications service market. Telecommunications
Policy, 32(3/4), 182-196. doi:10.1016/j.telpol.2007.09.004.

3. Sujata, J., Sanjay, B., Domb, M., Arindam, R., & Jyoti, S. (2015). An Empirical Study
to Measure Customer Experience for Telecom Operators in Indian Telecom
Industry. Annual International Conference On Qualitative & Quantitative Economics
Research, 34-41. doi:10.5176/2251-2012_QQE15.22.

4. Amulya.M. Customer retention strategies in telecom service providers in India

(Amulya.M, 2004)I.J.E.M.S.,VOL.4(2) 2013: 132-143.

5. International Journal of Business Research and Management (IJBRM), Volume (2) :

Issue (3) : 201. CRM Implementation in Indian Telecom Industry – Evaluating the
Effectiveness of Mobile Service Providers Using Data Envelopment Analysis