How Cellular Companies are Saving their customers?

Guest Post by Hammad Malik

According to PTA’s very recent public stats, the total numbers of cellular subscriber in Pakistan are soon going to hit 90 million mark. The saturated Telco’s market of Pakistan is now asking for QoS (Quality of Service), Continuous improvement in network infrastructure and customer service & care programs.

If we randomly analyze the Pakistan Telco’s market, we will get the findings that almost all of the major factors have been utilized. Recently, we all have observed new launches of Mobile Telco, though market was expecting huge change in pricing structures and in some DATA services to be free, but results were not as anticipated.

According to an estimation, it has been observed that most of the cellular subscribers utilize these connections as the secondary choice (few people may have different opinion here) and they registers every number as a habitual behavior.  Thus investing millions of dollars in the same arena for customer acquisition is no more tactful attitude as it was before.

As pricing competition in Pakistan’s cellular market has almost broken every global record. The cheaper products & Services offer to try and beat off rivals’ offers, it’s a profit killer.

In Pakistan, MNP (Mobile Network Portability) was launched by PTA back in March, 2007, this facility has somewhat given free choice to customer for switching to desire Telco’s for their offers of product & services. Since MNP launched, customer churns is been high for the Telco’s  , Especially Telco’s who are not producing the Quality Service, and not offering loyalty development programs to retained customer with their products & services. (While keep this fact in mind, that MNP itself has lot of controversial loop holes in services).

As the Churn rate all over the world has been increased at 2.3% (Source: Wireless Intelligence), like Vodafone had 40.9% Churn rate in June 2006, (Source: Wireless Intelligence), it has became the new target opportunity to avail. In Europe the reason for high churn rate was that the Telco’s were spending money on Customer Acquisition instead of Customer Retention programs till 2005.

Especially, in intense competition and the absence of differentiation in mobile market are two main causes of churn, then Customer Retention strategies gives differentiation to one competitor to other.

But Question remained unanswered is that: In which form should Customer retention strategies formulated?

Answer is very simple,

Stephen Covey, author of The Seven Habits of Highly Effective People, uses the phrase “emotional bank account” to describe the principle of reciprocity and the corresponding credit-withdrawal process in relationships. Using the metaphor of a financial bank account, he describes the trust that accumulates in a relationship. Like the financial bank account, you must make deposits before you can make withdrawals.

Loyalty programs:

Rewarding the customers who are loyal seems an obvious solution to reduce churn.

•    For instance in UK, Mobile Subs Penetration exceeded 110% (Source: Wireless Intelligence). O2 introduced the loyalty programmes, offering different subscribers’ base (Postpaid – Prepaid) double amount of money within timeframe spending, and Prepaid & Postpaid churn fell by 12% and 21% respectively. (Source: The Economist)

•    In Spain, Telefonica Moviles is pursuing a loyalty scheme, where user get loyalty points, depending on the usage over a period of time, According to the financial Statement of Q1, 2006, this loyalty programme helped significantly to reduce churn rate by to 2%.

•    Telefonica mobiles also introduced the multi-channel strategy, where subs can interact, the way they can, with their mobile operators (through Video, IVR).

•    Telefonica & O2 has also introduced the micro credits schemes, a useful service for customers who may temporarily unable to buy the phone credits.

Like Customer Demographics (Ovum Case study)

Prepaid customers are the major threat to increase the churn rate. In Africa & Eastern Europe the churn rate is high, because of huge base of Prepaid customers.

“The future battle in the mobile industries will be to get better profiles of customers” says Sandy Aitken , A BCS (Business Consulting Services) partner at IBM.

“The more the operator knows about the customer, the higher the rate of reducing churn”, mobile operators will be able to offer service they want.

In Europe, mobile Telco’s are gathering these details by setting condition for subscribers to give personal details to avail particular offer.

Sticky Offers:

To cater the Prepaid Churns IM services can be of great help. The BlackBerry Email Solutions can be use as sticky offers for Postpaid Churns as well. At present, in the Pakistan, Ufone is pioneer in practicing the Retention & loyalty strategies since 2004, by offering different services like lucky draws, reward points redemption, double amount of money within timeframe spending, Valid complaints rewards, and other services.

Mobilink has also joined the league and has started practicing the retention program in 2008, with Jazz Offer for Dormant subscribers, while Warid has also come up with the somewhat similar strategies.

Still for other mobile service providers it is not very late to enter for this cause in market, as it is most predictive and effective mode to reduce churns and to compete with new facilities like MNP.

The mobile service providers now have to change their line of attack. The new technologies licenses like UMTS, 3G & Video Telephony will no longer play the role in the customer acquisition as it will not remain as a competitive edge to any competitor.

The Quality in Service and Customer care programs will now be the tool to get the competitive edge & customer retention strategy to get customer connected with the same Network ID’s and to reduce churns.

For mobile service providers sky is the limits. But no more in customer acquisition instead in customer retention & loyalty development in the Pakistani mobile market, especially in this intense competition and the absence of differentiation in the mobile market place.

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About the Author
Farhan is a Business Graduate with specialization in Marketing. Farhan is an entrepreneur and is currently running his venture Aarpix.com - Pakistan's 1st e-Mag and Mega Portal.