Customer Retention Strategies of Telecom Service Providers

In the 21 st century, the new economy is becoming increasingly customer centric. Customer retention is considered one of the main relationship marketing concepts concerned with developing and maintaining a long-term customer-firm relationship. The importance of customer retention has increased since a majority of firms started to suffer a noticeable loss of customers, along with the complexity and high costs of acquiring new customers (Bird, 2005; Goyles and Gokey, 2005; Voss and Voss, 2008). Thus, the model of competition has shifted from acquiring new customers to retaining existing customers and luring customers away from rival companies. Service sector is the fastest growing segment as compared to the other sectors of the Indian economy. A major stimulus in this shift is the movement to information age spurred by invention of computer and advancements in telecommunications. As countries continue to shift from agricultural base to service orientation, the demand for service further holds huge potential. Additional factors contributing to the growth of service sector are higher per capita income, increased time pressures, advances in product technology, spiraling competition, rise of industrialization, technological advances, globalization, competition, greater life expectancy, cost effectiveness drivers, growth of service chains networks and service quality movements. Thus, tremendous growth of service sector implies the role of marketing in terms of vast opportunities and implications, marketing opportunities arising from new technology, in franchising from fewer regulations and professional restrictions, in servicing physical goods and international markets. The rapid change and reform of the market has increased the types of service offered on a subscription basis in different service sectors such as the mobile telecom service market, in which the customer retention issue is critical. As technology and mobile network penetration have both increased, attracting rival’s subscribers and maximizing customer retention have become urgent and timely concerns for mobile service providers in India. Previous research in this area has mainly focused on studying the determinants of acquiring more subscribers rather than studying the determinants of retaining existing customers (Ahn et al., 2006). Also, the existing literature does not sufficiently explore the factors motivating individuals to be loyal subscribers; further investigation is required into why a customer repurchases from the same service provider. Therefore, this study aims to follow this route to