CUSTOMER LOYALTY IN TELECOM

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Factors affecting customer loyalty in any services:

Customer loyalty trends in telecomm:
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Acquiring a new telecom customer is six times more costly than retaining an existing customer. Customer churn among mobile operators have been as high as 30%. An entire customer base can switch between competitors in just over three years. The breakeven time of mobile operators for a new subscriber can be as long as one year. The typical company gets 65% of its business from its existing customers It costs 5 times more to find a new customer than to keep an existing customer happy. It takes 12 good service experiences to overcome a single bad one 7 of 10 customers who switch to the competition do so because of poor service. 91% of unhappy customers won¶t buy again from the company that displeased them And unhappy customers will not only defect, they will grumble to 9 of their friends Satisfaction doesn¶t mean loyalty

or MNP. making the market more competitive. as well as entry and investment decisions are likely to be affected with the implementation of MNP. market shares. the impact on some carriers like Reliance (leader in CDMA services). however. 1 in overall customer satisfaction) will be positive. all cost-benefit studies project that the effect of MNP will be positive overall. which allows mobile users to switch between service providers without changing their number. have refrained from advertising over number portability as they don't expect any great impact from the new service. activation. Idea Cellular and Vodafone India are among a select group of telcos making frantic marketing moves to make the best of mobile number portability. allowing you to execute cross-sell and up-sell programs. renewal or churn Cross sell analytics : technology and analytic services required to deliver smarter and more actionable marketing decisions. Market giant Bharti Airtel will not see any impact either way. price elasticity. . including market leader Airtel and Reliance Communications. loyalty rewards. personalized features etc Understanding the drivers of churn : Expected impact of MNP : y y y y Overall. MTNL (first to launch 3G) and Tata Indicom (ranked No. Most operators.Factors affecting customer loyalty in telecomm: y y y y y Customer services: o Solicit feedback o Complaint handling o VAS Price fairness : Emotional connection with the number Brand image Referrals Methods to retain the customers : y y y Separate behavioural segmentation for prepaid and post paid customers: identify customers with higher propensity to response. Others like Idea are not likely to get benefits because of limited target group and are even likely to see a negative impact. Retail prices. Even though there are both direct and indirect costs of introducing MNP. MNP is expected to reduce the cost of switching operators. termination charges.

Even as mobile number portability (MNP) is only a week old.6%) want to switch over to another telecom company. Given India¶s mobile subscriber base of more than 700 million. and one out of five who want to change will go to Vodafone Essar. less that 1% customers changed their operator in almost two months. connectivity.40.y y y y Analysts estimate the rate of subscriber churn at 6-8% among pre-paid subscribers.000 out of 19 million subscribers in Haryana have switched their operators. according to telecom regulator TRAI. telecom operators say about 90 per cent of customers who opted for a new service provider are pre-paid subscribers. 2010. Around two lakh responses from 700 million subscribers in eight days is not a healthy sign. only around two lakh porting requests were received from consumers across the country. More than one out of six mobile phone subscribers (17. MNP launched in November : In Haryana. But only half the subscribers who want to switch are dissatisfied with the service they get. and 1-3% among post-paid subscribers. The special MNP offerings and promotion campaigns from private and public operators failed to attract the users. According to Department of Telecommunications. Subscribers are more likely to get efficient services at lower rates. One out of three consumers who are considering switching want to sign up with Airtel. Updates after the launch : The response from subscribers to mobile number portability (MNP) schemes is negligible ever since it launched on January 20. who make up nearly 95% of India¶s 700 million mobile phone connections. How Could MNP Disrupt Mobile Service Providers: y y y y Loss of Branding : prefix acting as indentifier for brand Back-end Services : More cost on back end services Increased competition Higher cost structure : more on advertismenets and loyalty pgms Impact on Subscribers y y y y Subscribers can now use one number throughout their life and have the flexibility of changing service providers if they are unhappy with the tariff. . service. Subscribers can also change operators within their registered circles only. Airtel and Vodafone Essar will gain the most. it could mean that up to 120 million people want to switch. More than 1. etc. A subscriber can make a porting request only after 90 days of activation of connection.

Sistema-Shyam's MTS brand is the biggest loser among them with a net of 1. though they have lost the pre-paid ones. In Rajasthan too. including Uninor. Only 1.706 requests. From the perspective of competition. have once again failed to perform. This is significant since most of them used to claim that with MNP they would start gaining subscribers. Around 956 customers of Loop Telecom want to leave it and with regard to HFCL.462. In terms of losers. Mumbai ranks second with 11.845) want to port to Vodafone. analysts tend to group telecom operators into old players or incumbents. Among metros.449 users wanting to port their numbers.4 with a net of only 10. often derided as ³Raja licensees¶.121 subscribers in Kolkata have so far evinced interest in porting and their choice is also once again Vodafone (469).088) and Idea Cellular (15. Among telecom circles. MTS and Etisalat. the country¶s third-largest mobile operator has won hands down in terms of consumer preference. Innovative ways to retain customers: -free pizza by airtel -free sims and 50% off on first bill by reliance -airtel surprise for new customers who switched -no idea get idea and toll free helpline -vodafone ³ everybody is welcome´ ad using pug .220 wanting to port and once again Vodafone is the first choice (4.089. But Bharti have been able to retain most of their post-paid customers.502 wanting to port to it. which has so far been the best among the new lot is the only gainer in the pack with 370 customers wanting to port to it.354 customers wanting to port out of it.984 wanting to shift to it. Vodafone and Idea and BSNL ² and the socalled new entrants or challengers.218) want to move to Vodafone. The country¶s largest mobile operator Bharti Airtel is at No. Videocon. the first choice is Idea Cellular with 11. Uninor.627 subscribers so far sending in their requests to port. the number stands at 288. including Bharti Airtel. New telecom operators. While BSNL¶s net loss of customers going by the initial trend stands at 51. RCom follows closely at 48. Maharashtra follows with 25.812). in Maharashtra. followed by Aircel (28. Delhi ranked the highest with 15. The maximum number of Gujarat¶s subscribers (10.Customers already using multiple sims and dual sims so not much impact from MNP Vodafone-Essar.220).412 users wanting to port to it. Vodafone is the first choice with 5. It has emerged as the clear winner with a net 61. Gujarat ranks on top with 30. almost half of whom (7. it seems there¶s neck-and-neck competition between state-owned BSNL and the country¶s second-largest mobile operator Reliance Communications.789 users wanting to switch to it. Similarly.000 requests and Rajasthan is at the third place with 19.

604 subscribers leaving its network and 13. According to initial numbers.75 per cent of mobile subscribers in Haryana having made use of the porting service in the three months since its introduction. it ended up in the positive as it managed to lure 18. the system was launched across the country on January 20.267 leaving. including Sistema Shyam. . Idea Cellular. introduced a month ago in Haryana. Though these are initial numbers.741 coming in. which was the first to start an advertising campaign on MNP.837 of its subscribers.MNP in Haryana : With just 0. While MNP was introduced in Haryana in November.863 subscribers with 15. it is still unclear how the service will do following its pan-India launch Bharat Sanchar Nigam Ltd and Reliance Communications have emerged the biggest losers as a result of Mobile Number Portability (MNP). Even new players. BSNL has lost a net of over 20. Loop Telecom and Datacom (Videocon).271 subscribers from other operators' networks.015 subscribers joining its network and only 9. initial trends coming in from other parts of India are on similar lines. have ended up with a net loss in numbers as a result of MNP. while RCom has lost nearly 13.500 subscribers as on January 16. While these numbers are for Haryana. Vodafone gained the most with 30. has a net loss of 1.000 subscribers. the trends indicate a strong preference for incumbent GSM players. Although Bharti Airtel lost 10.