The telecom paradigm is perceptibly changing. As the focus shifts from increasing the customer base to growing the share of revenue, mobile phone service providers are focusing on a model where customer retention becomes the key focus area. In India, significant changes in the telecom scenario have influenced the strategy shift.
To start with, we had two operators in every circle. Now six or even seven operators compete in the same service area. Then, telecom costs have been consistently sliding, leading to the cheapest telecom rates in the world. All this has led to an explosion in subscriber numbers. But they also increased customer churn.
Even acquisition costs per subscriber were going down (from between Rs. 5,000 and Rs 10,000 in the late 1990s, it is now about Rs 1,000 per customer). But break-even on new customers still takes 18 to 24 months. Given these dynamics, it is more profitable to retain an existing customer than fighting for a new customer.
Today, non-portability of numbers in India acts as one of the biggest retention devices but this could be a temporary benefit. During the early stages of mobile telephony, customer retention typically meant providing basic customer services.
But when new entrants were actively wooing our customers, we recognised the need to focus on customer retention. We formed the Customer Asset Management (CAM) team, the business division parallel to our sales business unit. This team has a singleminded focus on retention activities with a direct say in all aspects of the business.
We also started to focus on attracting the right quality of customers. Towards this, we fine-tuned our acquisition strategy. We are exploring alternative channels for selling. It is important for a service brand to create differentiation, which is an experiential sum of all its interactions with the customer.
The total experience is our ability to deliver advanced products first in the market, providing an impeccable network quality and rounding off the product experience with a memorable service experience every time the customer interacts with us.(Krishna Angara, Executive Vice President, BPL Mobiles, Business Standard,
June 19, 2005).
According to Steve Schriver, research indicates that consumers are less loyal now than in the past due to the following reasons:
1. The abundance of choice.
2. Availability of information.
3. Customers ask, “What have you done for me lately?”
4. Most products/services appear to be similar – nothing stands out.
5. Customers’ financial problems reduce loyalty.
6. Time scarcity (not enough time to be loyal).
These forces lead to consumer defections, complaints, cynicism, decreased affiliation, greater price sensitivity, and a tendency to carry on lawsuits.
