Customer Retention Strategy Retaining Customers and Adding Value T Mobile

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Table of ContentsExecutive Summary..................................................................................................................................2

Introduction................................................................................................................................................3

Rationale behind Conducting the Research..........................................................................................5

Aim..............................................................................................................................................................6

Objectives..................................................................................................................................................6

Research Questions.................................................................................................................................6

Research Hypothesis...............................................................................................................................7

Brief Background of T Mobile..................................................................................................................7

Literature Review......................................................................................................................................9

Customer Retention: A Critical Perspective......................................................................................9

The Chain of Customer Satisfaction, Retention and Loyalty........................................................10

Importance of Marketing and CRM...................................................................................................12

Attributes Determining the Churn of the Customer........................................................................13

Strategies of Customer Retention in Telecom Industry.................................................................15

Assessing the Life Time Value of a Customer................................................................................17

Action Plan of Retaining the Customer Group while Confronting Challenges............................18

Key Measures for Retaining the Existing Base of Customers......................................................19

T Mobile and Customer Retention....................................................................................................21

Research Methodology..........................................................................................................................24

Strategy of Research..........................................................................................................................24

Research Sample...............................................................................................................................25

Collection of Primary Data.................................................................................................................25

Analysis of Data..................................................................................................................................27

Parameters of Validity and Reliability in Research.........................................................................28

Considering the Ethical Aspects while Conducting the Research................................................28

Analysis....................................................................................................................................................30

Discussion...............................................................................................................................................38

The Present Business Environment.................................................................................................38

Step by Step Approach of winning back the Existing base of Customers...................................39







The Adopted Approach of T Mobile in Retaining Their Customers..............................................41

Role of CRM in Improving the Rate of Retaining the Customers.................................................42

Correlation of Consumer Behavior and Retention..........................................................................43

The Strategies of Retaining the Customers from the Perceptive Of Telecom Industry.............44

Conclusion...............................................................................................................................................46

Recommendation while Designing the Action Plan for Customer Loyalty and Retention.............47

Appendix..................................................................................................................................................49

References:.............................................................................................................................................53







Executive Summary

The dissertation report on the strategies of retention in the telecom industry reviews the

dynamics of relationship marketing in the context of current competitive environment

which provides little or no scope for creating differentiation amongst the existing as well

as the emergent players of the market. The focus of the paper is to assess the various

customer retention and loyalty generation schemes which are being followed by T

Mobile in UK. This research is primarily conducted in two phase wherein the phase one

involves the review of the established literature related to customer retention strategies

and the second phase focuses upon analysis of the primary data collected from the

existing customers of T Mobile.

The research paper opens with an introduction about the chain of customer satisfaction,

retention and loyalty of the consumers which in turn strengthens the profitability of a

firm. Customer retention thereby is considered as one of the vital concepts in the arena

of intensified competition when relationship marketing emerges as the sole medium of

creating the minimal differentiation in the market. The assessment of the theories leads

to practical evaluation of the T Mobile customers by conducting a survey, which was

analyzed to understand the effectiveness of the practiced method in retaining the

customer base and sustaining in the competition.

The discussion section which follows the practical analysis of customer data of T Mobile

reflects the importance of CRM in increasing the long term value of the business. At the

same time as the market of telecom is reaching its saturation level, marketers are

focusing more upon the existing customer base and over their life time cycle through

various techniques of cross selling and up selling the products. The research report

finally ends with certain recommendation which can be effective in measuring the

effectiveness of strategies and improving the rate of retention of the customers.







Introduction

The purpose of the dissertation paper is to assess the customer retention strategies of T

Mobile in United Kingdom. In the contemporary context wherein the market is rapidly

approaching the level of saturation and the elements of creating differentiation in the

market are quickly disappearing, the concepts and practice of customer retention has

usurped the domain of marketing. The buzz word in the present time is that of customer

based relationship marketing. The concept of customer relationship marketing is said to

consist of three different attributes which are acquisition of the customer, their

development followed by the process of retention (Lawrence and Buttle, 2006). The

research related to the strategies of customer retention reveal that there exists a

positive and a negative approach of retaining the customer. The positive approach is

associated with the schemes of rewards and loyalty benefits whereas the negative

aspects talks about the barriers of switching for a different service provider. In United

Kingdom there exits various big and small telecom service providers which are giving

each other a tough competition and adopting every possible action plan of eating away

each other’s market share. This case is not unique to the telecom industry of the

company, keeping aside the case of monopolistic competition, the consumers in the

present day market have more opportunity and options easily available at their disposal

which enables them in acquiring similar services at almost similar prices from the wide

array of global as well as the local service providers existent in the market. Additionally

along with maintaining the optimum level of quality in service it is also essential that

loyalty bonuses or reward programs are held which can make the consumer feel the

recognition from the consumer for continuance of their service.

As the market of telecom in United Kingdom is gradually reaching it saturation level the

focuses of the players have shifted from customer acquisition to customer retention

while maintaining the constant lookout for including the element of differentiation.

Almost the entire population of the country has a service contract with some or the other

service provider. The only segments of customer that the telecom players can target

upon are the younger generation of foreign nationals who have migrated to the country.







This group of customers is therefore difficult to find as these segment of customer is

more involved in switching the service provider one after the other. In such an

environment even the small and emerging player in the market are adopting the

approach of differentiated product offering strategies which can lure the existing base of

customers in switching their existing service provider. T Mobile, being one of the largest

communication companies of the country boasts a strong base of clients which is close

to 30 million of the entire population. The company also runs more than 700 retail store

across the nation. Despite a strong presence in the country the company was gradually

feeling the pressure of the intensifying competition and emergence of the small players

which were adopting specific strategies of creating differentiation be offering specific

products offering. Responding such need T Mobile is not just focusing upon strategies

of retaining their existing customer base but also in enhancing the technical

infrastructure of processing business.

Despite the focus of the companies in retaining the existing level of customers, there is

a major list of companies that focuses heavily upon acquisition of customer base (Huber

and O’Gormann, 2008). It has been argues that the cost associated with acquisition of a

new customer is much more than maintaining an existing base of customer. This is

because investment involved at the initial stage of acquisition is significantly high which

impact the profitability of the firm. The stage wherein the customer is retained and has

developed the level of commitment towards the company is likely to depict repeated

purchase which can strengthen the bottom line of the company without spending much

to attract them. Again the strategy of retention is also focused around the attributes of

building loyalty and satisfaction which in turn helps in building the image and value of

the brand in the broad market through positive word of mouth. There are various

strategies which are essentially followed by an organization in increasing the profitability

of the firm; these are the strategies of cross selling as well as up selling.

When a marketer adopts the strategy of retention of customers it is also essential to

understand the various segment of customers, which can form the basis of designing

the strategies. For the need and requirement of each specific segment is different from







the other. One of the major segments is that of prepaid and the post paid customers.

The focus of the marketer is to convert the prepaid group of customers into the postpaid

form so that they can earn more revenue over the life time of the customer. Also the use

of post paid services can help the customers in enjoying the additional benefits attached

with the service like loyalty benefits. The marketers are keen in post paid customer as

the cost of maintaining them is less and the barriers of defection is pretty high. The shift

in focus of the marketers in refining their existing strategies of marketing and customer

retention is due to increasing intensity of the competition which has engulfed the

market. In order to sustain this competition and maintain one’s competitive edge it

becomes indispensable for the big and small player to devise novelty in their existing

strategies of doing business and drawing in customers.

Rationale behind Conducting the Research

The rationale for conducting the research is relevant in the context of present

competitive environment where market has reached the saturation level. In such a case

the various novel approaches are adopted by the marketer in maintaining their share in

the market. One such approach is that of retaining the existing base of customer which

can help the business entity in reducing the cost associated with acquisition of new

customers. Also in a matured market like United Kingdom it is even more difficult to find

a new group of customer. In case the marketer is able to find a group the scope of

defection of such a group is significantly higher as this group comprises of the young

population who migrate to the country from other neighboring country and are on a

constant lookout for cheaper and cost effective options of service providers.

The scope of the research was therefore to develop an understanding of the various

strategies of customer as prevalent in the telecom industry with special focus upon the

tactics of T Mobile in United Kingdom. Like its competitors the company provides the

provisions of both prepaid as well as the post paid schemes for servicing the customers.

Though it was believed that pre paid schemes are effective in attracting new groups of

customers, the cost associated with maintaining the prepaid customers are expensive

for the company with respect to the post paid ones. Also the probability of switching for







the prepaid customers is much easier than post paid ones which impacts the profitability

of the firm. The objective of the study therefore is to consider the strategy which can

retain the different segments of customers and strengthen the bottom line of the

company while adding value to the brand image and value in the closely competitive

market.

Aim

The aim of the undertaken research is to evaluate the various concepts of customer

retention strategies and its role in effectively retaining the existing group of customers

and adding value to the organization.

Objectives

The primary objectives that the undertaken research intends to answer are as given

below:

Develop a critical assessment of the various theories as well as the concepts of

customer retention

Assess various positive as well as negative customer retention tactics that are

commonly practiced by an organization in retaining their valuable group of

customers

Evaluate the effectiveness of the post paid/ contract connections in retaining the

existing base of customers and the role of Telecom Company in accomplishing

the same.

Analyze the various strategies and approaches as adopted by the telecom

companies for retaining their existing customers by converting the pre-paid

customer group into post paid users.

Make a comparative assessment of the new players in the UK telecom market

and evaluate their impact upon the existing and established players







Research Questions

The questions that were intended to be answered through this research survey are as

given below:

1. To find the strategies, both positive and negative in nature as used by the T

Mobile in retaining their existing base of customers

2. What are the effective strategies of customer retention and evaluate if the

establishment of the post paid contract with the customers is an effective tool in

retaining the customers

3. To check if there is a degree of variation in the profitability of the pre paid as well

as the post paid group of customers

4. To assess if the existing customers are defecting towards the new entrants in the

telecom market and understand the various strategies followed by other

organizations in the industry for retaining the customers

Research Hypothesis

The research paper proposes to test the following hypothesis, which can be modified

during the stage of actually conducting the research when the literature section has

been reviewed and assessed. The research survey is expected to be conducted

through collection of quantitative data which focuses to accept or reject the hypothesis

formed for conducting the analysis.

H1-Post paid customer group are considered more valuable from the company’s

perspective of profitability, with respect to the prepaid customers

H2-Establishment of a long term contract with the existing customer base is an effective

approach of retaining them with the company for their lifetime

Brief Background of T Mobile

T Mobile is considered as one of the leading telecom service provider of United

Kingdom. It is the part of the company called ‘Everything Everywhere Limited’ which

runs two major brands known as T Mobile and Orange. T Mobile, being one of the







largest communication companies of the country boasts a strong base of clients which

is close to 30 million of the entire population. The company also runs more than 700

retail store across the nation. Despite a strong presence in the country the company

was gradually feeling the pressure of the intensifying competition and emergence of the

small players which were adopting specific strategies of creating differentiation be

offering specific products offering. As the telecom market of the country is gearing

towards the level of saturation, it was not an effective approach is adopting the strategy

of acquiring new base of customers. The company thereby shifted its focus towards

designing the strategies of customer retention which in turn was helpful in maintaining

the profitability of the company. Though a significant number of players focused upon

acquisition of new customers, the rapidly rising level of saturation has led the marketers

to look for other options of maintaining their competitive advantage. Responding such

need T Mobile is not just focusing upon strategies of retaining their existing customer

base but also in enhancing the technical infrastructure of processing business. The

company has introduced not just advanced technological infrastructure in effectively

maintaining its CRM database but has also brought in certain changes in their

organizational structure which can address the future needs in an effective and efficient

manner that aimed to integrate CRM with the regular processes of business. Despite

the fact the company at certain point in time ruled the telecom business of the country,

has recorded the highest rate of customer churn. The purpose of the research is to

understand the measures undertaken by the company to combat the same and sustain

its competitive positioning in the business market.







Literature Review

Customer Retention: A Critical Perspective

Ever since the days of industrial revolution and mass manufacturing of products, the

approach of mass marketing was considered as the only means of catering the client

base. The concept retained its popularity as long as the business houses had to meet

the same needs of different customers, which eventually distanced the consumers from

the business firms. This aspect was not considered seriously till the global boundaries

of trade and commerce were lifted and consumers were presented with the options of

selecting the firm not just on the basis of the products delivered but also the services

provided to them. In reality it was the gradual intensification of competition amongst the

existing as well as the emerging players that the concept of services marketing started

ruling the marketing arena. The objective of the marketer under this concept was not

just to address a large client base but also to build and maintain the relationship with

them. The focus of the marketer therefore shifted from acquisition of customers to

retention of the existing base of customers (Sheth and Kellstadt, 2002). As attested by

Thurau and Hansen (2000), the marketers have essentially realized the advantages of

retaining their existing customer base when they aspire to scale the world of business,

which in turn has made the element of customer retention an important aspect of the

core strategy of business. Contrasting these views, various other researchers opine that

in order to gain a profitable share in the market, business houses are primarily focusing

upon acquiring new customers rather than retaining the existing ones (Buttle, 2008,

Cahill, 2007). Also the concept of retention is considered as a reactive strategy which is

adopted when the other viable strategies of acquisition fail to drive in any effective

results (Pilecki, 2007). However, the aspect of relationship management and reducing

the gap between the firm and the customers has started attracting the interest of various

marketers. Again the attribute of gaining the cost advantage by doing away with the

additional cost associated with acquisition of new customers is diverting the attention

towards customer retention and profit generation (Raab, 2008).







The strategy of customer retention is focused upon the attributes like commitment of

customers, their loyalty as well as managing the relationship. In the post globalization

era where the customers have the liberty of choosing from a wide array of products and

services from various emerging as well as established players, the probability of losing

the existing customer base to the competitor is growing strong. As a matter of fact, in

the telecom industry various players started feeling the heat of their shrinking customer

base, while they were busy focusing upon acquisition of new customer strategies

(Jacade, 2008). In such a scenario the need of customer retention as a part of core

business strategy is not just essential for business prospects but has become

indispensable for its survival. The research has also revealed that the experiences like

dissatisfaction with the services of the existing provider; availability of better and cost

effective alternatives in the broad market as well as certain negative experience with the

current service provider leads a customer to switch their service providers and fuel up

the already heated competition amongst the players (Urquizo, 2006). Furthermore, in an

industry like telecom which is heading towards saturation, the prospects of acquiring

customers and expanding the existing base seems like a remote possibility. The

demand of such an environment is to invoke the aspect of loyalty in the existing group

of customers which is made possible by retaining them and managing a healthy

relationship with them. The relationship management with the customers therefore not

just helps in reducing the gap by understanding their need better and retaining them but

also in negating the scope of search for alternative service providers.

The Chain of Customer Satisfaction, Retention and Loyalty

The concept of satisfaction, retention and loyalty chain of the customer is considered

the core of developing the strategies of CRM (customer relationship management)

which in turn leads to understand the dynamics of profitability of a firm. As attested by

Schiffman (2006), a consumer develops a tendency of behaving positively towards a

brand and its products when he derives satisfaction after using their services. This

positive attitude also helps in building the positive image of the brand through positive

word of mouth. Satisfaction, so much so is considered as one of the basic criteria which







is responsible for generating a greater rate of retention, loyalty and in turn the

profitability of the organization (Anderson and Mittal, 2000).

Fig: 1 Adapted from Heskett et al, 1994

Apart from the theoretical aspect, the importance of the quality of delivered services has

magnified with the growing intensity of the competition in the broad market. In an

industry like telecom wherein the elements of differentiation of products are limited, a

company can earn the competitive advantage on the basis of its special services. The

focus upon services also helps a company in maintaining and strengthening its

relationship with the customer which negates the scope of churning despite availability

of competitive options in the broad market (Pezeshki, 2009). In order to improve the

services and operational proficiency of a firm it is essential that the manager is capable

of understanding the different impact of different services upon the satisfaction level of

the customers. This understanding in turn helps the marketer in focusing upon those

services which has a greater degree of positive impact upon the customers. Various

studies and research conducted in the past have reinstated the fact that there exists a

strong relationship between the satisfaction level of a customer and their future intention

related to continuation of relationship and product purchase (Reichheld et al., 2000).

Additionally the changing behavior of the marketing domain by shifting the focus from

transactional approach to relationship marketing has brought in significant changes in

the strategies of handling the customers. So that the value of the organization is created

through its valued customers and the customers in turn bring in repeat purchases.

In its actuality the concepts of retention and defection are considered as the two

different sides of the same coin. If retention details the probability of the customer

repurchasing the products and services of a given product, the defection details the

scope of switching to other service providers. It is an established fact that reducing the







churning rate of the consumers can strengthen the bottom line of the company (Kotler,

2006). The role of business intelligence thereby is also increasing as it helps a marketer

in formulating the appropriate strategies by assessing the effectiveness of the

implemented strategies amongst the customer groups (Lee and Trim, 2006). The

development of technology and intensity of the competition has made the marketers

look for options which can gauge not just the sentiments of the markets and the

customers but also assess the effectiveness of every strategic approach of the

company vis-à-vis the competition, so as to sustain its market share in a comfortable

manner in the near future.

Importance of Marketing and CRM

The role and concept of marketing has essentially been understood to create,

communicate as well as deliver the value to the end consumer. It plays a major role in

aligning the process of a business house as per the demand of the consumers. The

database marketing in one such field, which provides information about various

segments and groups of customers through identifying and analyzing the different

available segments from the entire population which in turn helps a firm in reaching their

targeted group of customers in an effective manner. As the focus of marketing has

shifted from transactional mode to the building of relationship, the economic value of the

customer has been raised dramatically. The growing importance of relationship aspect

in marketing has redirected the strategy of relationship development in the long term

scenario rather than focusing upon short term attributes like generating sales (Pezeshki,

2009). As defined in the below figure the value of the customer in the present context of

relationship marketing is considered as the present value of future cash flow which can

be accomplished by maintaining a healthy relationship (Kumar and Reinartz, 2005).







Fig: 2 Sources: Adapted from Kumar and Reinartz (2005)

Apart from the value rendered by the customer in strengthening the bottom line of the

company, building and maintaining the relationship emerges as the sole element of

differentiator in the competitive market (Yastrow, 2007). Moreover the customers are

not interested in the amount of profit that the company is making but in what measures

the company is taking in meeting their needs, which in turn can be easily accomplished

by enhancing the personal relationships with the customers.

In the contemporary business world, the role of CRM has increased manifold as it

emerges as an effective tool in improving the rate of retaining a customer. The focus of

CRM model is upon appreciating the innate need of the customer which when delivered

leaves them at awe. Such an experience from the end of the service provider minimizes

the scope of defection and in turn improves the profitability of the firm. Taking cue from

the chain relationship of customer’s level of satisfaction to their degree of retention and

loyalty it can be inferred that all these factors come into play while determining the

longevity of the customer. The attribute of loyalty is considered as the emotional criteria

which helps an organization in driving in their economic value.

Attributes Determining the Churn of the Customer

The growing intensity of the competition in the broad market has witnessed churn of

customers from the existing service provider to any new player in the markets. There







are various factors which are responsible for impacting the churning rate of customers,

one of which is the wide and the easy availability of options from various global as well

as local providers. The advancement of technology has not just flooded the markets

with wide array of options in terms of services and services providers but also has

minimized the cost associated with switching of service providers (Jacade, 2008). As

the element of differentiation is essentially disappearing from the market, the marketers

are on a constant lookout for the best possible measure of creating differentiation. Such

practices are shaping through the element of innovation in the strategy of marketing and

management of customer relationship. The importance of CRM is also an offshoot of

this competition which was capable of creating the much needed differentiation in the

market.

In order to assess the various categories of customer churn it is essential to understand

the segments of churning process which impacts the operations of a business

organization. The two popular category of customer churn is that of voluntary as well as

involuntary. Along with this other factors resulting from the growing intensity of the

competition like elasticity of price, brand value, nature and the quality of services are

responsible in influencing the churn of existing customer base (Xevelonakis, 2005).

Apart from these some of the widely accepted categories of customer churn are as

given below:

Situational: The parameters defining the situational causes are like the elements

of availability, accessibility, convenience as well as the quality of services which

helps in boosting loyalty. Despite the correlation of these factors with the

behavioral aspects, the basic behavioral attributes cannot be considered for

measuring loyalty as the emotional aspects are essentially missing in them.

Contractual: These causes are also related with the financial benefits that a

customer can enjoy after using a long term contract. The attributes of contracts

can be used for attracting a customer and retaining them with the organization by

extending the duration of the contract and providing the customers with loyalty

benefits for using that service.







Economic: The primary reason as widely understood and believed for rising rate

of customer attrition is the economic one. The prospects of cost advantage in

switching the existing service provider has been one of the major causes of

churn (Buttle, 2008). Apart from it certain overhead charges as levied by the

existing service provider also leads the customer to make this move of severing

the relationship and lookout in the broad market for cost effective options.

Functional: Sometimes customers readily switch their existing service provider

due to high end technical services provided by the new users. However, such a

stay in certain cases doesn’t last long and the customers return back to their

original service provider. The reason for this switch was technical compatibility

which the other provider was not capable of addressing and forcefully infuses

commitment in the customer to use the services of his previous provider.

Psychological: The causes associated with the psychology of the customers are

also responsible in determining their longevity with an organization. The very

element of commitment has no strings attached with material aspects of

business, which thereby can be achieved by moulding the attitude of the

customer with the quality of the services and meeting their innate needs even

before they voice it. Such an approach by the marketers positively influences the

behaviour of the consumer and helps in restricting the rate of churn (Schiffman,

2006).

It is essential for a marketer to measure the degree of loyalty such that measures can

be taken in maintaining the existing base and competitive positioning of the brand in the

broad market. One noticeable aspect here is that the loyalty or the satisfaction of the

customer cannot be achieved by modeling through various tools but by improving the

level as well as the quality of services provided to them, which in turn takes care of the

retention (Rai, 2008).

Strategies of Customer Retention in Telecom Industry

Telecom industry is one such industry which has undergone significant transformation

ever since the advancement of technology. If development of technology has been a







boon for the prosperity of the industry, the diminishing line of differentiation in terms of

product delivery started impacting the existing players. As the market is developing and

barriers of entering the marketing are declining the competition is intensifying at a

phenomenal rate. The scope of expanding the market share is rapidly heading the

saturation level and therefore the existing players are devising means of eating up each

other’s market share by attracting customers with lucrative offers. The concepts like

loyalty discounts and bonuses are some of the attributes which has emerged as one of

the means of retaining the existing group of customers (Capon, 2009). This approach is

considered as a positive manner of attracting and retaining customers. Along with the

positive action plan there exists a series of negative approaches of retaining customers

which levies penalty upon customers in case of switching their service providers.

Despite such measures of retaining customers through positive and negative

approaches, the process of measuring the rate of retention is very difficult in this

industry. The marketer is not able to gauge the particular group of customer which helps

in strengthening their profit margin. Additionally it becomes equally difficult in measuring

the behavioral aspects of the customer in the context of their satisfaction, retention as

well as loyalty. Another challenge that is typically faced by the marketers of this

segment is that when certain low involvement products or a packaged service is brought

by the user off the self it becomes extremely difficult in back tracking the specific

segment of customer. Though retention and profitability of the firm are believed to be

interrelated, the behavior of a consumer is never measured or improved by the figures

of profits and revenue (Peppers and Rogers, 2008).

Notwithstanding the challenges in retaining the customer amidst the competitive

environment and wide availability of options, hunting for new customers is way too

expensive from the perspective of this industry. As attested by Brown (2004) acquisition

of fresh customer happens to be eight times more expensive than retaining the existing

group, thereby the attention and the energy of the marketers are shifting majorly

towards the effective strategies of customer retention. Also the companies are capable

of generating greater revenue over the life time of a customer through cross selling and

up selling of various products and services like that of broadband for internet, music,







insurances to name a few. A study carried by Gupta et al (2004) reinstated the fact that

if a company is capable of retaining its existing base of customers by just 1% it can

witness a rise in the level of profitability by atleast 5%. In a similar study carried out by

Ralston (1996) revealed that changing as low as one unit in the level of satisfaction of

the customers can bring in 6% of change in the likelihood of retaining the customers.

Again as per the conceptual model of customer retention the retention process is seen

in the context of switching intention of the customers. It is thereby important for the

marketers in identifying the factors responsible for defection of the customers which can

help them in not just predicting the probability of churns but also the risk associated with

the switching of customers at a particular point in time (Chun et al, 2007). Though

utilization of the forecasting techniques help in predicting the probability of the churning

rate of the customers considering the aspects like frequency of call, time and duration of

usage, selection of calling plans, unpaid balances etc these approaches are predictive

than being descriptive in nature which fail to provide the essential directives for

managers in improving the operations of their company (Ahn et al., 2006).

Assessing the Life Time Value of a Customer

A firm can strengthen its competitive positioning in the market when it is capable of

calculating the value of the customer that evolves over a period in time. The very term

‘lifetime value (LTV)’ of a customer is associated with the economic value attached

throughout the course of his life cycle with the organization. The ability to assess the

probability of retention and defection through this model helps a marketer in designing

his strategies of business (Kurma and Reinartz, 2005). Despite the usefulness of LTV,

accurately calculating the same is not just complex but also uncertain. A marketer

thereby needs to consider some of the major aspects which can help in the process of

prediction and analysis. Some of the major steps are as given (Pezeshki, 2009):

Rate of Churn: The rate at which customers end their existing contract or

relationship with the organization in a given period in time defines this rate.

Rate of Discount: This attribute is the capital cost which is essential used for

discounting future revenue from a customer.







Cost Associated with Retention: When the marketer equates the cost involved in

retaining a specific group of customer it eases the process of assessing their

value.

Period of Service: This aspect is related to length of the relationship the customer

has with the organization and the length which the marketer decides to consider

for making the assessment.

Periodic Revenue: This refers to the revenue generated by a customer over a

period in time which can indicate in assessing their value from the organizational

perspective in the long run.

Profit Margin: Though the figure is essentially the difference between revenue

and cost reflected as percentage of profit, it can provide certain cue in doing a

trend analysis with the rate of defection and acquisition of customers.

Understanding the parameters responsible for calculating the customer life time value is

one step forward in estimating the value of the customer and thereby designs the

strategies in a manner which can strengthen the bottom line of the company. Apart from

this knowing the value of various customers also helps in segmenting them in various

groups and approaching each of them in a specific manner which in turn can support

the process of customer retention (Kotler, 2006). Segmenting the existing base of the

customers also helps the organizations in prioritizing the need and demand of the group

on the basis of their value from the organizational perspective. So much so

segmentation is one of the most vital aspects of customer relationship management, as

a good understanding of the various attributes of service quality as well as the

parameters of customer value coupled with the role played by each segment of the

customers are considered as the effective elements which helps in the process of

business decision making and reduce the cost associated with operation by ensuring

optimal allocation of resources (Matzler and Sauerwein, 2002). Additionally the

classification of customer groups and the service offering can be influenced by the level

of expectation of the customers (Matzler and Renzl, 2007).







Action Plan of Retaining the Customer Group while Confronting Challenges

The telecom market in United Kingdom is highly competitive with various small and big

players cluttering the broad market. In such a market of close competitors, wherein

each player is greedily eyeing at the other’s share in the market the real challenge is

about retaining the existing customer base. The major players are changing their

strategy of product promotion and marketing to attract customers for combo offers while

shelling out limited money. As the option of pre paid services eases the process of

switching the service providers, the company are considering every possible options of

converting their pre paid customer groups into to the contracted (post paid) ones

(Pilecki, 2007).

As the market is losing the elements of differentiation, wherein every small and big

player offering the best possible combo deals, the focus of the marketers has shifted

towards establishing a relationship with the customer group so that they are capable of

understanding their need in an effective manner. As widely understood the customer is

not interested in the performance of an organization the only concern that they have is

how effectively their needs and demands are met and queries are addressed. Such

aspect can be handled in a better manner when the relationship is established and

services of the company focuses upon catering the consumer needs rather than selling

their products. The process of relationship building can be initiated once the marketer

has rightly identified the various segments and addresses the specific needs of each

one of them (Capon, 2009). The process of assessing the performance of the firm with

respect to a particular segment of valued customers can also help in the process of

making necessary amendments in the strategy of business. Notwithstanding the fact

that identifying the valued segment of customer and acutely calculating the value of

customer is challenging, the marketers can devise segment specific approach of

addressing needs which can add the element of customization in them and has a

greater scope of increasing the level of satisfaction of the customers.







Key Measures for Retaining the Existing Base of Customers

As already discussed and attested by various researchers the cost associated with

retaining an existing base of customer is eight times less than the cost involved in

acquiring a newer group. A marketer can reduce the cost of acquiring new customers

when he is capable of managing and maintaining the existing group. The process of

retention can be effective when the strategy of retention and customer relationship is

considered as a core part of the business strategy (Restrepo, 2006). Doing so can also

help an organization in using its available resources in the optimal manner. This

lucrative process can deliver desired results once the marketer is capable of

segmenting the various groups of customers and assessing the one most valuable

amongst them.

Some of the major aspects which when followed can help in maintaining the existing

customer base is as follows:

Segmenting the customer base: The role of segmentation is very critical when a

marketer decides to design the strategies of retention. Different segment has

different potential of generating benefit for the company; such that once the

profitable segment of the customer is identified it is easily for the marketers in

execution of their strategies. The effective segmentation will also take into

consideration the factors responsible of customer attrition and the means of

managing them in an effective manner.

Designing a strategic plan of action that focuses on customer retention and their

management: As the cost associated with acquisition of new customer is

significantly higher than retaining the existing base the focus of the marketer has

also shifted more towards refining their existing strategies of acquisition. In this

context the process of assessing the life time value of the customer is also

helpful in designing the retention strategies in a manner which considers that

influential factors which impact the decision making process of the consumers

(Schiffman, 2006).







Improving the level and penetration of service provided: A customer is easily

attracted when he feels that the services offered by the company is much more

than the price he is actually paying for it. When a single service provider can

increase the range of services the scope of hunting for comprehensive service

provider decreases and increases the chances of retention (Kotle, 2006).

Making offers for every specified segment of customers: The effective strategy of

segmentation is not limited to identifying the profitable group but also to design

the action plan which can generate interest amongst the customer group in

continuing with the services of their existing providers. This can be made

possible when the objective of the business are realized by every member of the

company and prepares offer plans as well as service types which cannot be

replicated easily by the closest competitors. Such an approach can serve the

dual purpose of retaining the existing customers and attracting new ones with the

element of differentiation.

Maintaining a recovery of services desk: The primary objective of maintaining a

recovery desk is to assist those customers who wish to breach their existing

contract for various external factors and offer them the helping hand by providing

the best possible alternative or compensation and increasing the scope of

commitment towards the service provider (Restrepo, 2006). Such an approach

can negate the scope of negative experience and can boost the element of

loyalty.

Training the employees in meeting the organizational objectives: The process of

training the existing employee is also important in the process of retention. This

is because like the well equipped technological infrastructure of a company is

capable of effectively managing the customer data, a well trained employee is

also capable of effectively addressing the client’s needs in a manner the scope of

customer attrition decreases and brand value increases through positive word of

mouth.

Making an assessment of the customers who leave the organization: When the

customer leaves the services and severe a contract it is essential for the







marketer in identifying the actual reason that has led to exist. Apart from

assessing the company’s capability it is also required to keep an eye on the

competitive offering in the broad market which can lure the customers. A

proactive approach is required in this field which can be useful for a marketer in

not just retaining their existing customer group but also to attract the new ones.

An organization can have the optimal strategy when it comes to segmenting, targeting

as well as positioning their product in the market. Yet such an idealistic organization can

fail in the competitive environment when it essentially overlooks the strategies of

retention and relationship management with the customers.

T Mobile and Customer Retention

The telecom industry is one of the most dynamic industries which are essentially driven

by the rapid changes happening in the market. Apart from responding to the changing

needs of the customers, the industry also needs to keep itself updated as per the

advancements of technology which are effective tools in driving the company towards

competitive success. Amongst the various available service providers of telecom

services, T Mobile is one of the leading players which provide mobile telephony to the

customer of United Kingdom. In order to sustain its position amongst various emergent

as well as existing players in the market, the company is focusing upon various

strategies of customer retention (Huber and O’Gormann, 2008). Though a significant

number of players focused upon acquisition of new customers, the rapidly rising level of

saturation has led the marketers to look for other options of maintaining their

competitive advantage. Responding such need T Mobile is not just focusing upon

strategies of retaining their existing customer base but also in enhancing the technical

infrastructure of processing business. The company has introduced not just advanced

technological infrastructure in effectively maintaining its CRM database but has also

brought in certain changes in their organizational structure which can address the future

needs in an effective and efficient manner that aimed to integrate CRM with the regular

processes of business (Budzick and Dupré, 2008).







Despite enjoying a significant customer base of roughly 30 million customers and

operating as one of the biggest communication company of United Kingdom, T Mobile

felt the need of retaining its existing base of customer. The growing competition in the

country was such that claiming the largest share of the market was no longer significant

as the availability of varied options eases the process of switching the service provider.

There was a time when T Mobile registered a 34.8% churn rate which was considered

highest in the country, and the total cost that the company had to spend for replacing

these departed population of customers was close to $162.3 million (Thompson, 2005).

The concept of retaining the customer has emerged as one of the aspect which can

help the company in accomplishing profit while putting a check upon the cost associated

with acquisition of new customers. T Mobile has therefore shifted its focus upon the

various strategies which can improve the level of relationship with its existing base of

the customers. For doing so apart from improving the technical and technological

infrastructure of the company, it has joined hands with companies’ specialized in

delivering effective IT solution. Such a strategic move has enable T Mobile in reducing

the time spent for handling the customers by 29%, stated O’Reilly, Collection Risk

Manger at T Mobile (2009). The role of CRM and use of advanced technology has

thereby become indispensable in maintaining a strong foothold amongst the various

players in the closely competitive market.







Research Methodology

The methodology followed for this research began with the critical assessment of

literature which focused primarily upon the identified objectives which the research

aimed to answer. The review of literature was therefore directing more towards the

various strategies of customer retention evaluating the practical importance of retaining

the existing customer group from the perspective of company’s health. Considering the

reviews from various researches as discussed in the literature section, the aim of this

research study was to develop certain hypothesis around the questions formulated for

conducting the research. In order to develop a deep insight into the given topic a

primary research survey was carried out which centered its attention upon strategy of

quantitative research. The conducted survey considered the customers of T Mobile as

the sample for analyzing the trend of customer relationship and retention with the help

of statistical tools. The customer survey was conducted as a step forward to answer the

various questions that were posed at the beginning of the research work.

Strategy of Research

In the given project of dissertation the strategy followed for conducting the research is a

quantitative one. The basic aspect which the research proposes to analyze various

variables like effectiveness of the currently practiced strategy of retention, profit margin

associated by retaining the customer base along with the differences of post paid and

the pre paid customer groups. Further in this context quantitative technique seems the

best one as the collected data from these variables are numerical in nature and the

analyzed results derived from interpretation of this data can be easily used for

generalization of the trend in the larger population (Kothari, 2003). This approach of

conducting the research was also useful in collecting and analyzing data from a larger

customer base. Had the approach of qualitative method been used it would have

consumer significant amount of time unnecessarily. The qualitative method also would

have provided with limited data when it comes to numbers which in turn makes it difficult

to evaluate the concepts of customer retention and loyalty management. Another

reason for preferring quantitative technique over the qualitative one is due to the reason







that this method also provides the requisite tools for collection as well as analysis if the

collected data. In reality considering every limitation that was confronted during the

course of carrying out this research work it was felt that the quantitative approach of

assessing data is the best possible strategy of research.

Research Sample

As the given research was proposed to be conducted upon the existing customers of T

Mobile, the sample considered for the study was the number of customer currently

associated with the organization and its services. The sample data is gathered from the

secondary source which was helping in doing the analysis by using the appropriate

technique of sampling. The sampling technique chosen in this case was that of non-

probabilistic one which is also known as the non-random technique of sampling. This

technique is very simple in nature and is doesn’t take into account the total number of

population (Burns and Burns, 2008). Another advantage of using this sampling

technique is that it doesn’t consider the sample size vis-à-vis the population. The

sample considered is this case was also within the limited boundaries of survey as well

as time. Other parameters that come under the boundary of limitation are availability of

resources for conducting the research. After taking a due account of the scope

demanded by the research and the limitation existing in the system, the non-

probabilistic sampling technique was considered which focused upon the sample size of

200 customer of T Mobile. Considering this as the base sample it was also decided to

have an equal distribution of pre paid as well as the post paid customers, which can

help in interpreting the trend of retention in these two major segments of customers. In

this case therefore, 200 customers were segregated in equal halves, wherein the first

100 questionnaire was filled from the pre-paid service users and the rest 100 were dully

filled by the post-paid users.

Collection of Primary Data

The major source for collection of the primary data was done by interviewing the

existing base of T Mobile customers with the help of a semi-structured questionnaire.

The questionnaire was designed on the basis of the hypothesis which the research aims







to test. The questionnaire method was adopted for collection of primary data as this is

one of the simplest manners of sourcing the required data from the sample population

chosen for conducting the research (Bryman and Bell, 2007). In the initial stage of the

research a pilot questionnaire was also done amongst the group of people associated

with the research. This piloting was conducted upon a very small sample of 10 people

with the intention to validate the reliability aspect of the questionnaire when used as a

research instrument upon the final group of sample population. The questionnaire was

designed in a manner which was easy to fill by the customer groups. The design also

helped the researcher to analyze the results by assessing the various options of the

Likert scale.

Apart from directly collecting the questionnaire from the targeted sample group, the

survey used the online channels of social networking like Facebook and other related

sites for assess the interested user groups of T Mobile customers. It was also found that

there were several profiles of various customer groups of T Mobile which was

established in these social networking channels. These sites created through the online

platform were another effort of marketing the services of the company and maintaining

the relationship with the customer base. Further the process administering the survey

by means of the popular channel of online media also helped in instituting a direct

contact with customer base. It was also easier for the researcher in directly approach

the user group of T Mobile services by simply uploading the questionnaire in the

respective networking site after conducting the pilot research survey amongst the third

party survey taking website, after which the same link was posted in various other

networking sites of T Mobile users to reach the intended audience for collecting the

population data. Along with the online tools of survey, a small group of the company’s

customers were also approached for the process of primary data collection.

Collection of primary data for conducting research and deducing meaning is of vital

importance as the primary category of data ensures in collecting relevant information

directly and freshly from the targeted group of audience/ respondents. Apart from filling

of the questionnaire, the attributes of observations are also fairly used in developing a







clear idea of the various strategies followed by T Mobile in attracting as well as retaining

the customer base. Another aspect which intensifies the use of primary data is the fact

that freshly collected data are flexible enough which can be aligned as per the research

objective which is not accomplished successfully when only secondary medium is used.

After collecting the relevant data through primary sources the next step is to clean and

process them which can lead to interpretation of meaningful results. Some of the simple

mathematical as well as statistical tools like hlookup and vlookup were used which not

just validates the collected data but also helps in ensuring that the authenticity of the

collected data is maintained.

Analysis of Data

Once the relevant quantitative data was collected through the use of survey

questionnaire, the next was to analyze them by cross tabulating them with various

variables like level of customer satisfaction, profitability of the firm, impact of the

competition upon retaining the existing base of customer. Cross tabulation is one of the

effective techniques of data analysis which has similarity with the technique of

correlation analysis. The technique of cross tabulation was chosen as it allows

developing a connection between various variables with the data point established from

the collected data through survey questionnaire. The primary objective of the research

is to find out which groups of consumers viz. the post paid or the prepaid are in reality,

more profitable from the perspective of business, and to assess if the strategies

adopted for retaining the prepaid customers are driving in effective as well as desired

results. Therefore the different set of data collected from prepaid as well as the post

paid customers, was tabulated and analyzed for assessing the profitability of the

adopted strategy. Apart from the effectiveness of strategy the process of tabulating the

data helped in doing a comparative assessment of the attributes like level of customer

satisfaction, defection as well as the correlation of effectiveness of retention strategy

with the profitability of the firm. After analyzing the data collected through primary

sources, the inferences are presented in tabular as well as graphical form which eases







the process of associating them with the theoretical concepts and establishing the

correlation.

Parameters of Validity and Reliability in Research

The attributes of validity as well as reliability are one of the vital elements that help

determining the credibility of the research results. In order to establish validity, the

questionnaire prepared for conducting the survey was tested in a pilot batch before

using the same in the sample population chosen for conducting the research. When the

questionnaire was tested in the pilot batch which consisted of a small third party

sample, it became easier for the researcher in collecting the feedback from the users

(third party sample users in our case) which in turn helped in making the necessary

changes. This scope of bringing in the requisite changes for improving the effectiveness

of the questionnaire increases the validity as well as the reliability of the research. It is

critical to ensure the validity as well as the reliability of the collected data as the analysis

as well as interpretation of the research findings is directly dependent upon them. The

process of using cross tabulation of data for analysis of data provides the scope of

conducting a comparative assessment with the data available through secondary

sources and ensure that the results has a common trend line when equated with other

researchers results. The validation of collected data is critical as even the slightest

scope of misinterpreting data increases the chance of leading towards skewed results,

which can defeat the purpose of conducting the research. Maintaining some of these

steps also ensures that data is neither tampered nor manipulated for tailoring the results

in the desired manner, which can then help in making a genuine assessment of the

problem chosen for the survey.

Considering the Ethical Aspects while Conducting the Research

Ethics is considered as the basic foundation which has the capability of directing the

behaviour of a human being and determines his actions as well as his relationships with

his surroundings (Cooper et al, 2006). In the given research the ethical aspects were

taken into consideration in order to prevent any unforeseen negative consequences that

could befall upon the participants when they participated in the survey and provided







candid feedback. Consideration of the ethical attributes also helped in ensuring the fact

that there is no scope of misusing the personal as well as the sensitive form of

information collected from the respondents group. At the same time ethical practices

also ensures that the data collected for this research are not used for any other

purposes and are destroyed once the analysis is completed. The care was thereby

undertaken in maintaining the confidentiality of the collected information. At the same

time it was also considered that the respondents are made aware of the nature as well

as the scope of conducting the research, by defining the aim and objective of the

conducted research before beginning the survey. A brief document of introduction

detailing the nature, scope as well as the objective of the research was handed away to

every sample customer who participated in the survey. The introductory document also

ensured in taking the voluntary consent of the participants while providing them with

every detail which they seek related to survey.







Analysis

The customers of T Mobile were selected as the sample group for conducting the

research. The selected sample population group was segregated on the basis of their

service plan which was post paid or pre paid in nature, which then was divided on the

basis of various demographic parameters like age, sex, and educational as well as

professional background. The wide range of customer group in terms of the

demographic parameters helped in assessing the trend that in terms of demand as well

as the expectation of the customers while selecting the services of the company. The

macro level segmentation of the customer group during the process of survey helped in

judging the level of preference of the customers. Further a single copy of the

questionnaire was used for both online as well as filed survey of the customer groups so

that there exists no discrepancies in the manner of interpretation of the questions and

collected of relevant data. (A copy of questionnaire is attached in the appendix for ready

reference). The major findings from the conducted survey have been discussed in the

following section.

The data gathered from the survey revealed that the strategies of the service providers

are more acquisitive in nature. Though the importance of retaining the customers is

understood by the audience the emphasis is more upon the acquisition and expanding

the customer base. This approach of the marketers leads the customers to hunt for

various alternatives which are available easily in the broad market. The practices and

the services rendered by the T Mobile group are taken in a very positive manner by the

customers. The post paid group of the customers which primarily comprises of the

corporate clients is significantly happy with the kind of services provided to them. The

add-on features like corporate discounts, bundled services as well as the support

services through their 24 hour customer service desks are some of the aspects which

are readily accepted and appreciated by the corporate segment of the customers.

The below figure depicts the effectiveness of the currently used strategy of the

company. The group of respondents when asked to rate their preference in terms of the







service provided by T Mobile with respect to its closest competitors revealed that

strategy of retention as followed by the company is considered useful when assessed in

the competitive environment. One interesting finding here is that though more than 50%

of the population who respondent the survey voted in favor of the currently used

strategy of customer retention, there exists a good 20% from the same population pool

who feels that the strategies followed are not yet equipped fully in meeting the needs

and demand of the contemporary population.

52%

17%

9%

22%

Present Strategy

Useful

Not Useful

Not Sure

Can be Better

Fig: 1 Source: Primary Data

Considering the various aspects like saturation of the market, increasing intensity of the

competition, rapid increase of the number of new players in the market are some of the

factors which exerts a pressure upon any existing service providers in designing its

marketing and promotional strategies in a manner that the existing base of the

customers are not lured away by the other players in the market. The growing intensity

of the competition made the business environment so dynamic that it was not enough to

design an effective strategy but to ensure that it can face the challenges as posed by

the competitors.







52%

17%

9%

22%

Differentition

Strong

Mild

Not Sure

Cant Say

Fig: 2 Sources: Primary Data

The element of differentiation has always been a critical element which helped in

demarking the strong players versus the emerging counterparts. However with the

growing standardization and the rapid emergence of a number of small players, the

aspect of differentiation is losing its ground. The marketers are consciously working

upon various permutation and combination of strategies which can help them in

devising a unique differentiation which cannot be replicated easily by the competitors. In

the case of T Mobile more than 50% of the respondent population feels that the

company has differentiated itself from other player by improving the quality of service,

whereas other 50% of the respondents are not quite sure if there actually exists an

element which can differentiate T Mobile from its closest competitors. In actual terms

almost every player of the UK telecom market are focusing upon the improving the

service which in turn makes it difficult in determining if the level as well as the quality of

service provided by the company is actually a differentiator or not.







44%

28%

7%

21%

Customization

Present

Not Present

Not Sure

Cant Say


In the business environment wherein the possibility of creating differentiation in the

market are essentially decreasing the focus has shifted towards devising some novel

attributes which can be used as a source of creating differentiation. The process of

creating customization is one such aspect which is typically used by the marketers in

the contemporary business environment which helps in differentiating it from its closest

group of competitors. The survey data reveals that T Mobile incorporates maximum

customization in order to retain their existing base of the customers. There is a group

more customers who still feel that the degree of customization is not present in the

services as well as the products delivered by the company. As the population of this

group was more than 25%, the raw data was analyzed to develop an insight about the

nature of the respondents. It was then found that the prepaid group of customers felt the

lack of customization, which was infact another reason of their switching the service

provider. One thing however needs to be noted here is that the focus of the company is

more upon the post paid customers who have been identified as the valued segment,

hence little or no customization for the prepaid segment.







41%

35%

6%

18%

CRM Model

Very Important

Somewhat Important

Not Important

Cant Say


The concept as well as the practice of CRM in the context of building the value of a

brand and retaining the customer base has become very critical in the recent past. The

use of CRM is also seen to have delivered the desired level of services to the consumer

groups. From the perspective of the customer it was not important to assess what

approaches the company is undertaking in beating the competitive heat but to know

about the strategies and approaches that it has adopted in meeting the needs and

demands of the customer group. The techniques of CRM are also considered to play an

effective role in retaining the existing base of the customer, as it focuses upon those

factors which help in determining the actual need of the consumers. In reality at the very

core of a CRM strategy there lays the ability for creation of mutual values for both the

parties. The importance of CRM is attested by the customer group as they have felt that

there needs were addressed in an effective manner by the company post

implementation of the strategies of CRM. From the organizational perspective CRM

tools has enabled not just in effective maintenance of the customer database which

improved the state of relationship but also to determine the profitable group of the

customers.







33%

40%

7%

20%

Advertisment and Brand Value

Very Important

Somewhat Important

Not Important

Cant Say


When the competition in the market intensifies it is essential in using every possible tool

of marketing and promotion in spreading the awareness of the product and services

offering of a brand. Apart from this the strategies as well as the means of

communication and promotion helps in building relationship with the existing base of the

customers. When the respondents groups were asked to rate the importance of

advertisement in building the brand image in the customer’s minds, it was found that

close to 70% of the respondent population were of the opinion that there is a strong

association of the promotional and advertising strategies which helps a marketer in

building the image of the brand. The means of promotion and advertisements are other

aspects which help in strengthening the relationship of the consumer with the brand and

its services. If from the perspective of the customer advertisements are a medium of

awareness building from the perspective of marketers it is a tool which can be effective

in building relationship. At the same time the marketers of T Mobile are also focusing

upon the tools of CRM and CSM (customer satisfaction marketing), which can take care

of the relationship with the sensitive group of customers.







44%

33%

6%

17%

Competition and Brand Value

Strong

Somewhat Strong

Weak

Cant Say


The survey also helped in understanding the association of the brand value in

sustaining in the competition. When the respondents were asked to rate the value of the

brand amongst its closest competitors, more than 40% of the total respondents

population voted in favor of brand value in the face of the competition. Therefore the

role of competition is also critical in creating the value of a brand. In other words, for

sustaining in the competition it is essential for every player to strengthen their value of

the brand which is possible through retaining the existing customer base and providing

quality service which helps in spreading a positive word of mouth. At the same time it

also became evident that close to 17% of the respondents were not aware if there exists

a correlation in building the value of a brand for sustaining in the competition. When

crossed checked with the existing data it revealed that it was the pre paid consumer

group who had little or no concern about the market competition or the value of the

brand. For them the discounts deals matter above everything else. The marketer can

thereby develop a different approach of addressing it’s prepaid as well as the postpaid

customers.

It thereby became evident from the survey that the telecom players like T Mobile are

facing heated competition from the various small and big players. In order to sustain this

competition and maintain their existing share in the market the focus of the company

has shifted towards relationship marketing and retaining the existing base of the







customers. In order to effectively manage the existing database of the customer and

strengthening the relationship with them, the company is upgrading the existing

technological infrastructure at the company. Apart from this the company is also taking

considerable measures of converting the pre paid group of customers into post paid, by

luring them with attractive offers including loyalty benefits. The firm is faced with the

difficulty of measuring the value attached with every customer yet it considers the

various attributes which when taken care of can help in driving in value for the

organization. The future value of the firm is derived from the present value attached with

the consumer groups, a fact which was reestablished through this survey of T Mobile

customers.







Discussion

The Present Business Environment

The lifting of trade barriers, improvement of the economy and the advancement of the

technology has together attributed to increasing intensity of the competition in every

sphere of business. This is because the ease of entering the marketplace has invited

various small and big players in the business arenas which are challenging the

sustainability of various business houses. Keeping aside the case of monopolistic

competition, the consumers in the present day market have more opportunity and

options easily available at their disposal which enables them in acquiring similar

services at almost similar prices from the wide array of global as well as the local

service providers existent in the market. In such a scenarios of cut throat competition

amongst the marketers in attracting the customers or retaining their existing base of

customers, emotional attributes emerge as an important criteria which can influence the

decision making process of the customer irrespective of the price. The need and role of

customer services has thereby magnified in the recent past for a company can no

longer afford to induce negative feelings in the minds of the customers which can lead

towards defection. Inefficiency in services has led many customers to switch their long

time service provider which in turn impacts the business significantly.

Though various business houses considered the price factor in impacting the churning

of customers, the quality of services are more critical in leading towards defection. In

true sense drop in price for a particular segment of products might not attract

significantly positive response from the customer group, but improving the level of

services can improve the level of satisfaction of the customers which can be effective in

retaining them and converting them as loyal group in a gradual manner. Additionally

along with maintaining the optimum level of quality in service it is also essential that

loyalty bonuses or reward programs are held which can make the consumer feel the

recognition from the consumer for continuance of their service. Developing a positive

attitude amongst the existing customers is also effective in building a positive brand







image of the brand through positive word of mouth. An effective strategy of customer

relationship management thereby helps a marketer in creation of mutual values for

every participant involved in the process of customer company relationship

maintenance (Restrepo, 2006). Considering the fact that designing the effective strategy

of retaining the valuable customer group is not devoid of challenges, both predictive and

descriptive approaches of assessing the business environment are to be taken into

consideration which can help a marketer in designing the strategies. Doing so can also

encourage the marketer in treating the strategies of retention as a core part of their

entire business plan (Pilecki, 2007). The growing need of customer retention has also

led the marketers to focus upon CSM (customer satisfaction marketing) rather than

blindly following the direction of CRM.

Henceforth, with the limited scope of differentiation in an industry like mobile telephony

the approach of quickly addressing the needs of the customers can help a player in

maintaining a strong foothold against the growing competition.

Step by Step Approach of winning back the Existing base of Customers

As it was seen that maintaining the existing base of the customer is significantly

profitable for the business which cannot be accomplished when the approach of

acquiring new customers is followed, in order to effectively design the strategies of

retaining the customer there are certain steps which are to be considered by the

marketer for deriving desired results. Some of the well defined steps of accomplishing

the same are discussed below (Thompson, 2005):

Identification of the potential sources of defection: It is critical for the marketers to

closely follow the trend of the customer, in terms of their usage of services or

payment. Any significant decline in the same can be an indicator of probable

churn which can be avoided when necessary measures are taken in the right

time. As emotions tend to play a key role in impacting the decision making

process of the customer, the same cue can be used for keeping the customers

from leaving the services of the company.







Communication with the customers: The mode of communication has always

been identified as an essential attribute of marketing and relationship building.

The various modes and channels of communication like phone calls, email, direct

mails etc can be used from time to time to prevent the customers from entering

the verge of defection. Maintaining a customer database and sending a note or

SMS on their birthdays and anniversary are another means of maintaining the

customers involved with the company.

Lending an ear to the front line employees: The front line employees are an

important source of information when it comes to make a decision related to

customer retention strategy. As the front line employee are the first line of contact

for the customers it is also essential that the marketer carefully assesses any

issue raised by them for the inputs provided by them can be effective in

maintaining the profitability of the firm. Also treating them with fairness can

develop a positive attitude which can help in building a positive relationship with

the customers.

Treating the valuable segment of the customers in a special manner: Whenever

the company hunts for the strategy of retaining its existing customer it also

considers the manner in which they should be retained. It is therefore essential

for the marketer to develop the risk and revenue matrix of the customers such

that priority customers are assessed and strategies are designed accordingly.

Using fairness of practice: The major trend of customer churn in the telecom

industry is primarily due to better price deals as available through other service

providers. However this is not the only reason that leads to defection. The focus

of the marketer thereby should be upon providing the fair and quality services to

the customers such that even slightest variation in the prices does not influence

them to switch providers.

Carefully using the barriers of exit: One of the popular means of retaining the

customers is to make it difficult for the existing customer group to leave the

company services. Some of the simple steps like requirement of a short notice

before leaving the services can provide the company with the required







opportunity to dive in to the problem and see if that can be rectified for

continuation of services.

Winning back the right group of customers: Some customer still tend to leave the

organization despite the best effort by the marketer. In such cases by finding the

reason of their leave and assessing their level of satisfaction with the new service

providers can help the marketers in winning them back and converting them into

loyal group of customers. This aspects considers the calculating the second life

time value of the customers.

The Adopted Approach of T Mobile in Retaining Their Customers

T Mobile is considered as one of the leading telecom service providers of United

Kingdom which enjoys a large customer base of approximately 30million population.

Despite such a strong base the company is not devoid of competitive pressure from

various established players like British Telecom, Virgin Mobile or new entrants like

Vectone, Lyca and Lebera. There are numerous other small players that have entered

the telecom market of United Kingdom and are targeting a specific group of consumer

segment. As the market is gradually reaching it saturation level the focuses of the

players have shifted from customer acquisition to customer retention while maintaining

the constant lookout for including the element of differentiation. The small and emerging

player in the market are adopting the approach of differentiated product offering

strategies which can lure the existing base of customers in switching their existing

service provider. An established player like T Mobile is also not immune from this

strategy of the small players. In order to maintain its competitive stance in the market,

the company has not just considered the various strategies of customer retention but

also has revamped its existing technological infrastructure which provides technical help

to the customers. In order to improve the existing level of services provided by the

company the advanced technical tools were incorporated for managing the CRM

system of the business. At the same time the company has also joined hands with

technically specialized companies in addressing the client’s queries in an effective as

well as efficient manner.







T Mobile offers both pre paid as well as the post paid schemes of mobile services to its

customers. As it became evident that the rate of churn was easier in the pre paid case

the focus of the marketers shifted to the post paid section which emphasized upon

providing loyalty bonuses for continuing with the services. The company has also used

a predictive tool to assess the probability of churn beforehand and take relevant steps in

addressing the problem in an effective manner. The data collected from the survey

results also revealed that practices currently followed by the company has adopted

specific strategies for different segment of the customer. The high valued customers are

dealt with special care and the strategies adopted for them are of specific nature.

Considering the element of customization has helped the company in strengthening its

foothold by catering to the different needs of different customer segment in their own

way. Another thing that became evident from the survey was that marketing

communicating plays an important role in building the brand value by spreading the

awareness of its wide array of offering to the various consumer segments.

Role of CRM in Improving the Rate of Retaining the Customers

The concept of CRM is the emerging model of maintaining the relationship with the

customers which has become like a buzzword in the world of business marketing. Apart

from various tools of marketing and strategies of customer retention, CRM is an

effective tool which helps in building the loyalty of the customers. The various ways in

which the use of CRM strategies can help in building the loyalty of the customers are

given as such:

Improving the delivery of services by considering a single customer view: The

use of CRM in the system of marketing helps in providing an integrated approach

of the viewing the customers such that every channel of marketing and

communication helps in providing the optimal quality of flawless services that are

demanded by the consumers in the contemporary world. As inefficient and poor

quality of customer service acts as an important factor of leading towards

churning of the customers, it is essential for the marketers in improving the







services for maintaining the existing base of the customers through

implementation of various models of retaining customers.

Optimizing the strategies of marketing by conducting the analysis of the

customer: When the techniques and tools of CRM are used it becomes easier for

the marketers in digging deep into the available data of the customer and find the

pattern of buying and service adoption. Such an idea of the trend of the

customers buying patterns helps in preparing for the needs of the customers.

Identification of the potential attribute of customer defection and designing the

strategies of being proactive: The process of analysis is very critical when it

comes to assess the effectiveness of strategy. The process of identifying the

potential of causes of defection can enable the marketer in taking measures in a

proactive manner and address the risk associated with customer leaving the

organization and resolving the issues which has led to such decisions.

Tie up of the customer centric behaviors and rewarding the employees: Once the

marketer is aware of the aspects and the attribute that drive the element of

loyalty in the customers, the system of CRM can be easily used for tracking the

behavior of the employees. Post that the employees should also be rewarded for

doing the right thing which has supported the objective of a company in retaining

its customer base.

CRM is thereby such a tool which helps not just maintaining the database of the

customers in an effective manner but also in conducting a predictive analysis of the

trend of buying and consumer behavior with respect to a specific product or service.

Further as the concept and practice of relationship marketing has evolved and is being

used essentially in the business strategies, various innovative and technically advanced

tools are searched by the marketers which can improve the effectiveness of delivering

the desired services. Therefore for strengthening the services as well as the strategies

of the organization the use of CRM as a tool is indispensable.







Correlation of Consumer Behavior and Retention

Until recent past the emphasis and the focus of the marketers were more upon the

attributes of marketing their product. With the development of technology, lifting of trade

barriers as well as growing intensity of the competitions made the marketers hunt for

every probable strategy which otherwise was negated or considered insignificant from

the perspective of business. The changing trend of doing business made the marketers

to focus on such aspects which otherwise was not considered. The aspect of consumer

behavior is one such area which started gaining importance as marketers started

realizing the value of retaining the existing customer base.

In the actual sense, the process of customer retention was not possible by mere

implementation of advanced technology or relationship building tools. Though to a

certain extent the tools were effective in establishing a fresh point of contact between

the customer and the company, and also provided with the scope of knowing the needs

of the customer in a better manner. The entire purpose of the tool can be defeated is

the basic behavior of the consumer is not taken into consideration (Schiffman, 2006).

For it is the basic psychology of the customer which plays an elemental role in

influencing the process of decision making in terms of products purchase or service

provider switches. When a marketer wishes to influence the thought process of the

consumer, it is essential that he carefully considers the trend of buying and the general

behavior of the consumer segment with respect to a specific product.

The basic know how of the consumer behavior is also essential in designing the

strategies of retention in an effective manner. Psychology has a major role in impacting

the retention of relationship with a specific service provider. Understanding the concepts

of consumer behavior also helps a marketer in assessing the probability of the

customers’ reaction towards a specific segment of product and service and emphasize

upon the attributes which can easily attract the attention of the customers. Apart from

this the consumer behavior is also effective in understanding the reasons that leads to

switch the service providers despite being satisfied with the existing level and quality of

services. The process of retaining the customers can be done in an effective manner







once the marketer is capable of tapping the right pulse of the market such that the

existing base of the customer is retain despite the growing intensity of the competition.

The Strategies of Retaining the Customers from the Perceptive Of Telecom

Industry

In the contemporary age the growing intensity of the competition has brought in

significant change in the pattern of doing business. The very attribute of differentiation

which helped in segregating one player from another is essentially missing now for the

standardization emerged as the mantra of the day. In such an age where in every

service provider is offering similar range and type of products and services, the

elements of differentiation can be created only by increasing the degree of providing

quality services and establishing a relationship with the customers such that there is no

scope of leaving the services of the existing providers. Also if the development of

technology is boon for the industry on the other hand it has intensified the competition.

The innovations are happening in such a short interval that lot of them goes unnoticed.

In order to grab the attention of the customer segment it is essential to focus upon the

attributes which are of customer’s interest and present them in a manner which is

readily accepted by them.

The tale of telecom industry is no different here. The rapid growth of the industry in the

recent years has brought the industry closer towards saturation such that the existing as

well as the emergent players are no longer focusing upon the aspects of customer

acquisition but retaining the existing base, which undoubtedly is the one that helps in

strengthening the bottom line. The players are essentially focusing upon various

strategies of marketing like loyalty schemes and attracting even the pre paid segment of

the customers towards the post paid group. It was found that the simplicity of switching

the service providers for the pre paid users leads to a higher rate of customer churn in

case of most of the telecom service providers. Again the cost associated with the

maintenance of the pre paid group is higher than that of the post paid one. The

strategies of the major players are thereby drifting towards converting the prepaid ones

into post paid and encash from the value of the customers over the lifetime of their







association with the company. The aspects of customer loyalty and their retention rate

are essentially of qualitative nature which in turn are of behavioral nature and depend

upon intermixing of various complex elements (Jacade, 2008). Thereby the focus of the

industry players are upon refining the existing strategies of customer retention and

focus upon the attributes which are responsible for increasing the rate of customer

churn. The tools of CRM are also helpful in this context due to its capability of

conducting predictive analysis. Despite the growing importance of the strategies of

retention, one thing that became evident was that the strategy of retention is still

considered as a reactive sport which comes into play only when the attrition of the

customer segments happens in significant manner.







Conclusion

In the light of the present day competitive environment it is evident that there is little or

no scope for differentiation in terms of price and technology, as both these attributes are

standardized essentially. In such a case the scope of attracting new customer

decreases, more so because of the rising level of market saturation and the higher cost

associated with the acquisition of customers. In such an age where in every service

provider is offering similar range and type of products and services, the elements of

differentiation can be created only by increasing the degree of providing quality services

and establishing a relationship with the customers such that there is no scope of leaving

the services of the existing providers. In the case of the telecom industry in United

Kingdom it was found that the players of the competitive market were more focused in

devising the strategies of customer retention which can effectively used for

strengthening their bottom line. The strategy of customer retention is focused upon the

attributes like commitment of customers, their loyalty as well as managing the

relationship. In the post globalization era where the customers have the liberty of

choosing from a wide array of products and services from various emerging as well as

established players, the probability of losing the existing customer base to the

competitor is growing strong. As a matter of fact, in the telecom industry various players

started feeling the heat of their shrinking customer base, while they were busy focusing

upon acquisition of new customer strategies. Further as the market of telecom in United

Kingdom is gradually reaching it saturation level the focuses of the players have shifted

from customer acquisition to customer retention while maintaining the constant lookout

for including the element of differentiation. The small and emerging player in the market

are adopting the approach of differentiated product offering strategies which can lure

the existing base of customers in switching their existing service provider. An

established player like T Mobile is also not immune from this strategy of the small

players. In order to maintain its competitive stance in the market, the company has not

just considered the various strategies of customer retention but also has revamped its

existing technological infrastructure which provides technical help to the customers. In







order to improve the existing level of services provided by the company the advanced

technical tools were incorporated for managing the CRM system of the business.

Keeping aside the case of monopolistic competition, the consumers in the present day

market have more opportunity and options easily available at their disposal which

enables them in acquiring similar services at almost similar prices from the wide array of

global as well as the local service providers existent in the market. Additionally along

with maintaining the optimum level of quality in service it is also essential that loyalty

bonuses or reward programs are held which can make the consumer feel the

recognition from the consumer for continuance of their service. Developing a positive

attitude amongst the existing customers is also effective in building a positive brand

image of the brand through positive word of mouth. An effective strategy of customer

relationship management thereby helps a marketer in creation of mutual values for

every participant involved in the process of customer company relationship

maintenance. The value and the importance of the strategies of customer retention

thereby have gained a major place in carving a niche for itself in the broad market.

Recommendation while Designing the Action Plan for Customer Loyalty and

Retention

The success of a firm is dependent upon the strategies that it adopts for retaining the

customer base and inducing the element of loyalty amongst the existing group of

customer. While designing the effective strategy of customer retention and loyalty it is

essential that the marketer makes an assessment of the life expectancy of the valued

customer over the organization so that the desired benefit can be accomplished. It is

also important to evaluate the risk and reward of the planned strategy before

implementing it so that there exists no deviation from the objective of core business.

Along with all these attributes it is also essential that a proper assessment of time is

done. This is because despite realizing the need and importance of customer retention,

it is essentially considered in a reactive manner which fails to deliver the effective

results. Therefore assessing the situation in a proactive manner is very important so







that there is no scope for losing the valuable base of customer and struggling in the

competitive environment coupled with declining profit margin.

Apart from this it is also essential for the marketer in predicting the attributes which can

play an effective role in supporting the churning rate of the customers. Understanding of

such aspects can help in designing the effective strategies of retaining the existing

group of customers. The use of tools from business intelligence is another way of doing

the predictive analysis which can help the marketer in designing the strategies of

business and customer retention much before the occurrence of the churning event.

Finally training the existing staff of the company is another important attribute which can

help in developing a healthy relationship with the customer base and negate the scope

of their severing the relationship with the firm.







Appendix

Questionnaire

Hello, as a part of my course curriculum I am conducting a study on the ‘Customer

Retention Strategies in T Mobile in UK’. In this regard I would like to consider your

opinion to help me in developing a proper understanding of the matter.

I would very much appreciate if you can take some valuable from your busy schedule

for me and provide the answer for the given questions. (Please tick the appropriate box

wherever required).

Section A

Name (optional):

Age:

a) 20-30 years b) 30-40 years c) 40-50 years d) 50-60 years e) 60 and above

Professional background:

a) Professional b) Self Employed c) Government Employee d) Student e) Others

Please specify your current designation/grade__________________________

How long have you been using the services of T Mobile?

a) Last 6 months b) almost a year c) 10-15 months e) more than 20 months f) more

than 5 years

When was the last time when you visited the customer support cell of T Mobile?

a) Less than 6 months b) 6-10 months c) 10-15 months d) 15- 20 months e) more

than 20 months f) more than 5 years







Section B

1. Do you think that the association with T Mobile as a service provider has helped

you in developing a stronger relationship with the brand?

a) Strongly agree b) agree c) disagree d) strongly disagree e) not sure

2. Do you think that management of the T Mobile is involved in conducting training

session for the employee that can improve their services?


3. Has your need been taken care of every time the company decides to introduce

a new range of product?


4. Do you feel the services of the T Mobile are better than other established mobile

solutions provider in the market?


5. Are all the elements of customer relationship management as adopted by T

Mobile equally important for you to decide upon continuing your contract?


6. Are the post paid schemes more attractive to you than the prepaid ones?

b) Strongly agree b) agree c) disagree d) strongly disagree e) not sure

7. Has there ever been a case when you felt that managers should have focused

more upon customer services rather than the marketing and promotion of brand?

c) Strongly agree b) agree c) disagree d) strongly disagree e) not sure







8. Given the opportunity to rate other service providers over T Mobile do you think

these it is more attractive?

d) Strongly agree b) agree c) disagree d) strongly disagree e) not sure

9. Which is one of the most attractive features of T Mobile?

a) Bundled packages

b) Service quality

c) Relationship Management

d) Range of products and services

e) Others Please specify___________

10. The value proposition and Brand value of T Mobile is

a) Attractive

b) Unnecessary

c) Can’t say

d) Others please specify______________________

12. Do you think additional features should have been considered apart from CRM

and service management?


13. The mode of promotion chosen for communicating the services or launches of

new packages of T Mobile is effective?


Thanks for your cooperation!







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Customer Retention Strategy Retaining Customers and Adding Value T Mobile

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