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By Vivek Khattar
A Study
An individual lives the role of a family man, worker, a citizen and consumer every day of his life. Many recent studies suggest that individuals are increasingly getting disillusioned with traditional structures – the family is no longer a stable entity, organizations are becoming increasingly large, complex & impersonal and our political structures are not what we expected them to be – our votes hardly allow us to see the decisions we want. With urban life becoming more complex, the first three roles allow for diminished rights while burdening the individual with greater responsibilities.
On the other hand, the role of the consumer is increasingly rewarding – we enjoy making choices, we make or break brands and we feel empowered. It is in the role of a consumer that we find freedom of choice and expression with the minimum obligation of duties.
It is in this context of socioeconomic fabric of general disillusionment with the surroundings that today’s marketers are faced with the challenge of not just satisfying customer needs but also ensuring customer delight to remain successful in the competitive marketplace! The telecom marketers are no strangers to this phenomenon. Telcos must keep improving their quality of service to retain their loyal customers and order to increase their brand share and profitability.
It is a known fact that long term customers spend more, refer new clients and are less costly to do business with. It is claimed by Reichheld and Sasser (1990) that a 5% improvement in customer retention can cause an increase in profitability between 25% and 85% (in terms of net present value) depending upon the industry.
According to Buchanan and Gilles (1990), the increased profitability associated with customer retention efforts occurs because:
- The cost of acquisition occurs only at the beginning of a relationship: the longer the relationship, the lower the amortized cost.
- Account maintenance costs decline as a percentage of total costs (or as a percentage of revenue).
- Long term customers tend to be less inclined to switch and also tend to be less price-sensitive. This can result in stable unit sales volume and increases in dollar-sales volume.
- Long term customers may initiate free word of mouth promotions and referrals.
- Long term customers are more likely to purchase ancillary products and high-margin supplemental products.
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"Telcos must keep improving their quality of service to retain their loyal customers and order to increase their brand share and profitability. " |
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- Long term customers tend to be satisfied with their relationship with the company and are less likely to switch to competitors, making market entry or competitors' market share gains difficult.
- Regular customers tend to be less expensive to service because they are familiar with the processes involved, require less "education," and are consistent in their order placement.
- Increased customer retention and loyalty make the employees' jobs easier and more satisfying. In turn, happy employees feed back into higher customer satisfaction in a virtuous circle.
The primary dimensions of product quality include Performance, Features, Reliability, Conformance, Durability, Serviceability, Aesthetics and perceived quality. Increasingly, service quality is also attracting a lot of attention. These service quality dimensions include Responsiveness, Reliability, Accuracy, Knowledge of Employees, Courtesy, Consistency and Speed. These listed dimensions of product and service quality are, in a broad sense, generic to most situations, although variations exist from one industry to another.
In the fields of packet-switched networks and computer networking, of course, Quality of Service (QoS) refers to the probability of the telecommunication network meeting a given traffic contract, or in many cases is used informally to refer to the probability of a packet succeeding in passing between two points in the network within its desired latency period. In the field of telephony, QoS refers to lack of noise and tones on the circuit, appropriate loudness levels, etc., and includes grade of service.
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