A STUDY ON FACTORS INFLUENCING CUSTOMER RELATIONSHIP MANAGEMENT (CRM) OF TELECOM COMPANIES

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1 A STUDY ON FACTORS INFLUENCING CUSTOMER RELATIONSHIP MANAGEMENT (CRM) OF TELECOM COMPANIES Dr. Rakshita Puranik Associate Professor, CH Institute of Management & Commerce, Indore, ABSTRACT Telecommunications is one of the most dynamic sectors, characterized by rapid marketplace changes. the shift from a supply driven market to a demand market has already taken place today it is exclusively related to the customer s needs. With the market moving toward an increased focus on the customer, Customer Relationship Management (CRM) evolved out of separate applications. To create a better environment for managing customer relationships, business need to look to a new approach called Customer Relationship Management (CRM). The objective of the study is to identify the factors that influence the CRM strategies applied by the telecom sector and to study the role of CRM as the new marketing tool in the field of mobile communication sector. The study is exploratory in nature as this study explored the importance of CRM tools in Telecom sector. Data collected from both primary and secondary source. Questionnaire was the tool for primary data collection and Secondary Data were collected from Journals, Books, News Papers, Research Papers, websites, etc. Probabilistic Sampling Design is used with the sample size of 100 respondents from the Indore (M.P) city. The statistical tool of factor analysis was used to arrive at result. Five factors were identified out of seventeen variables. The recommendation of the study will be useful to the companies, marketers and researchers. INTRODUCTION Globalization and the global dynamics of the market are forcing many enterprises to develop new strategies. The fight for worldwide market share has entered a new phase: the customer relationship is no longer only connected to products and services the shift from a supply driven market to a demand market has already taken place today it is exclusively related to the customer s needs. The customers want high quality, customized services at a low price and they want them immediately. With the market moving toward an increased focus on the customer, Customer Relationship Management (CRM) evolved out of separate applications The philosophy of CRM is the recognition of the fact that a long term relationship with customers can be one of the most important assets of an organization, providing competitive advantage and increased profitability. Marketing customer value means cultivating long term customer relationship. Companies are now moving away from wasteful mass marketing to more precious marketing designed to build strong customer relationships. Today s economy is supported by information business. Information has the advantage of being easy to differentiate, customize, personalize and dispatch over networks at incredible speed. BAUDDHIK VOLUME 4, NO.-3 SEPTEMBER- DECEMBER

2 Telecommunications is one of the most dynamic sectors, characterized by rapid marketplace changes. Market forces of deregulation, the entry of new international players, fixed-mobile substitution, new technologies and slowing growth and saturation emerging on the horizon create new opportunities and threats for incumbents and challengers. Fixed-line and mobile telecommunications operators face increased competition in what quickly becomes a buyer s market. The telecom sector is one of the fastest growing sectors in India. The telecom sector has, during the last decade, witnessed a transition from being a state-owned monopoly to one with competition and unprecedented growth in the subscriber base. The growth has contributed immensely to the improvement in the quality of the common man and also facilitating the promotion of trade and commerce besides strengthening the unity and integrity of the nation. The overall tele-density today is around 20 percent The challenge for telecommunications providers who want to remain competitive is for them to be able to quickly adapt their business models to meet the changing expectations of their customers while maintaining a good return on investments. In other words: to remain competitive companies need to expand their value proposition from the basic provision of network access and devices to offering advanced products and new services that meet customer needs. To create a better environment for managing customer relationships, business need to look to a new approach called Customer Relationship Management (CRM). 1. Elements of Customer Relationship Management 1.1Customer A customer refers to individuals or households that purchase goods and services generated within the economy. The word historically derives from "custom," meaning "habit"; a customer was someone who frequented a particular shop, who made it a habit to purchase goods there, and with whom the shopkeeper had to maintain a relationship to keep his or her "custom," meaning expected purchases in the future. 1.2 Customer needs A company can define its target market but fails to correctly understand the customer s needs as understanding customer needs and wants is not always simple. Some customers have needs of which they are not fully conscious, or they can not articulate these needs, in other words we can say that there is unsought need. 1.3 Customer Satisfaction Satisfaction is a person s feeling of pleasure or disappointment resulting from comparing a product s perceived performance (or outcome) in relation to his/her expectations (Philip Kotler, 2000). So customer satisfaction is a function of perceived performance of the product and expectations of the customers. If the customer satisfaction falls short of expectation the customer is dissatisfied. If the performance matches the expectations the customer is satisfied and if it exceeds expectations, the customer is highly satisfied or delighted. BAUDDHIK VOLUME 4, NO.-3 SEPTEMBER- DECEMBER

3 1.4 Customer value 2 Relationship Marketing In the field of marketing, a customer value proposition consists of the sum total of benefits which a vendor promises that a customer will receive in return for the customer's associated payment (or other value-transfer).in simple words: value proposition = what the customer gets for what the customer pays. 1.5 Customer retention It is not enough to attracting new customers skillful but the company must keep existing customer with them and increase their business, which is called customer retention. Too many companies suffer from high customer churn namely high customer defection. A company would be wise to measure customer satisfaction regularly, because the key to customer retention is customer satisfaction. A highly satisfied customer stays loyal longer, buys more as the company introduces new products and upgrades existing products, talk favorably about the company and its products, pays less attention to competing brands and is less sensitive to price, offers products or service ideas to the company and cost less to serve than new customers because transaction are routine. Some companies think they are getting a sense of customer satisfaction by tallying customer complaints, but 96% of unsatisfied customers don t complain; many just stop buying. The best thing a company can do is to make it easy for the customers to complain. However listening the complaints is not enough for customer retention, the company must respond quickly and constructively to the complaints. It is the deep and abiding regard for the customer, which is displayed in products and services offered. It is getting and keeping the customers. Communication with customer partners is a necessary process of relationship marketing. It helps in relationship development, fosters trust, and provides the information and knowledge needed to undertake the cooperative and collaborative activities of relationship marketing. By establishing proper communication channels for sharing information with customers a company can enhance their relationship with them. In addition to communicating with customers, it is also essential to establish intra-company communication, particularly among all concerned individuals and corporate functions that directly plays a role in managing the relationship with a specific customer or customer group. Customer relationship management (CRM) has attracted the expanded attention of practitioners and scholars. More and more companies are adopting customer-centric strategies, programs, tools, and technology for efficient and effective customer relationship management. They are realizing the need for in-depth and integrated customer knowledge in order to build close cooperative and partnering relationships with their customers. The emergence of new channels and technologies is significantly altering how companies interface with their customers, a development bringing about a greater degree of integration between marketing, sales, and customer service functions in organizations. For practitioners, CRM represents an enterprise approach to developing full-knowledge about customer behavior and preferences and to developing programs and strategies that encourage customers to continually enhance their business relationship with the company. BAUDDHIK VOLUME 4, NO.-3 SEPTEMBER- DECEMBER

4 3. Customer Relationship Management (CRM) Before we begin to examine the conceptual foundations of CRM, defining how CRM would be useful. In the marketing literature the terms customer relationship management and relationship marketing are used interchangeably. Customer relationship management is database marketing emphasizing the promotional aspects of marketing linked to database efforts. LITERATURE REVIEW Customer relationship management is the latest advancement in the field of effective marketing. In simple words Customer Relationship Management is all about dealing different Customer differently. CRM is a technology-enabled business management tool for developing and leveraging customer knowledge to cultivate, maintain, and strengthen profitable relationships (Sue and Morin 2001). Parvatiyar and Sheth (2002) explore the conceptual foundations of CRM that builds on other relationship development process models. CRM implementation challenges as well as CRM's potential to become a distinct discipline of marketing are also discussed in this paper The economy of developed and developing nation is dominated by service sector. The need of CRM is increasingly felt in today s corporate world; especially in service sector. Banking, Insurance, Financial, Hospitality, Travel, Airlines, ISPs and Retail sector have been reported to benefit most from CRM practices and technology and telecomm services is also not an exception. Thompson (2003) estimates that over $13 billion were spent worldwide on CRM-related technologies and services The Organizations are expected to focus their approach on having effective customer relationship. Mohamed H.P. & Sagadeven A (2002) wrote an article in which they enlightened that CRM is both business and technology strategy Raman (2006) proposes a model that explains the roles of organizational learning, business process orientation, customer-centric orientation, and task technology fit in enabling the transformation of CRM from a technological tool to an advantageproducing resource Krasnikov (2009 ) examines the impact of CRM implementation on two metrics of firm performance operational (cost) efficiency and the ability of firms to generate profits (profit efficiency) Gronroos (1991) define it is forming relationships with customers is the "raison de etre" of the firm and marketing should be devoted to building and enhancing such relationships. Similarly, Morgan and Hunt (1994) draw upon the distinction made between transactional exchanges and relational exchanges Telecommunications service providers manage and setup the networks to allow customers to communicate (provisioning), and bill end users for their use of the system. Customers who need telecommunication services select carriers by evaluating service and equipment costs, reviewing the reliability of the network, and comparing how specific services (features) match their communication needs. Shrivastava & Khandai (2002) explores customer satisfaction with mobile services by expanding the expectation and desire disconfirmation model and incorporating constructs of perceived customizability and self-efficacy.. By examining the literature on relationship marketing and other disciplines that contribute to the knowledge of CRM. We can say that competition is fierce and companies are adopting various practices to attract consumers BAUDDHIK VOLUME 4, NO.-3 SEPTEMBER- DECEMBER

5 and retain them. A verity of schemes and offers has been launched by cellular companies to lure the young consumers. Objective The objective of the study is to identify the factors that influence the CRM strategies applied by the telecom sector and to study the role of CRM as the new marketing tool in the field of mobile communication sector Results and Discussion Correlation is applied on the raw data and the results are tested on 5 % level of significance whose standard value is.196. The variable with value less than this is rejected, thus variable no. 11, Promotional messages is not considered for further calculation.then the remaining variables are taken and factor Analysis is done on the data and for determining the important factors of CRM and its influence on customers Research Methodology Study The study is exploratory in nature as this study explored the importance of CRM tools in Telecom sector. Sample Probabilistic Sampling Design is used with the sample size of 100 respondents from the Indore (M.P) city of various telecom service users Data collection tools Data collected from both primary and secondary source. Questionnaire was the tool for primary data collection and Secondary Data were collected from Journals, Books, News Papers, Research Papers, websites, etc Data analysis tools First, the responses of 100 telecom users are collected with the help of questionnaires. Then correlation is applied on the data and the results are tested on 5 % level of significance whose standard value is.196. The statistical tool of factor analysis was used to arrive at result Factor 1: Influence Factor one is named as influence because the variables directly or indirectly influence the satisfaction level of the customers, and the variables with the factor load are GPRS facility (.799), billing services (.694), Connectivity (.533), and Customer needs (.476) Factor 2: Value for money The second factor is value for money. The variables under this factor are mainly concerned with the money factor in the decision making process of the customers. The variables are SMS charges (.809), call charges (.705), value added services (.520), Roaming charges (.502), Schemes (.494). Factor 3: Relationship maintenance The third factor is Relationship maintenance where the variables deal with maintaining relationship with the customers and being in contact with them. The component variables are complaints and suggestions (.841), 365 x 24 Assistance (.783), Relat ionships with customers (.506). Factor 4: Core benefits BAUDDHIK VOLUME 4, NO.-3 SEPTEMBER- DECEMBER

6 This factor speaks about the core benefits, that a normal customers expects from the service provider, that s why this factor is core benefits. The component variables are Availability of Recharge coupons (.783), Network facility (.554). Factor 5: Value added services In this factor value added services the variables are about the value added services given by the service provider to the customers to give them little extra as compared to other market players. The variables are Availability of information (.856), Internet connectivity (.613) Table 1.1: Categorizing Different Variables Factor 1(influence) 1. GPRS facility 2. billing services 3. Connectivity 4. Customer needs Factor 2 (value for money) 1. SMS charges 2. call charges 3. value added services 4. Roaming charges 5. Schemes Factor 3 (relationship maintenance) 1.complaints and suggestions x 24 Assistance Variable 4 (benefits ) 1. Availabilit y of Recharge coupons 2. Network facility Variable 5(Value added services) 1. Availabilit y of Informatio n 2. Internet connectivity 3.Relationships with customers Table 1.2: Variables Variable No. Variable 1 Network facility 2 Availability of Recharge coupons 3 Connectivity 4 call charges 5 SMS charges 6 Roaming charges 7 value added services x 24 Assistance 9 GPRS facility 10 Billing services 11 Promotional messages 12 Schemes 13 Customer needs 14 Relationships with customers 15 complaints and suggestions 16 Internet connectivity 17 Availability of Information BAUDDHIK VOLUME 4, NO.-3 SEPTEMBER- DECEMBER

7 Table 1.3: Factor Load Factor Name Variables Individual variables load 1 Influence GPRS facility billing services Connectivity Customer needs Total factor load Value for money SMS charges call charges value added services Roaming charges Schemes Relationship Maintenance complaints and suggestions 365 x 24 Assistance Relationships with customers Benefits Availability of Recharge coupons Network facility Value added services Availability of Information Internet connectivity After analyzing the current market scenario we came to know that Indian telecom sector is one of the booming sectors of the country. There are many market players who have established themselves in this tough competition. Airtel with 32% market share is leading the way, where Vodafone at number two position with 23% market share. Other players are BSNL, RCOM (smart GSM service) and Idea. when CRM is concerned and public opinion is being taken the results are different. The 17 variables of CRM taken for the research are analyzed by using factor analysis and we come to know that the variables which are having highest load in Factor analysis are the variables which are of utmost important for the customer. These variables are GPRS facility billing services Connectivity Customer needs Thus we can interpret that when a customer goes for connection he wants a service which have above variables adequately satisfactory. Then the next highest loads are of following variables: SMS charges Call charges Value added services Roaming charges Schemes Thus we can say that after being satisfied with the core benefits the customers go for the value added services provide by the company. These services are SMS charges, call charges etc. After this the next high loads are of following variables: BAUDDHIK VOLUME 4, NO.-3 SEPTEMBER- DECEMBER

8 complaints and suggestions 365 x 24 Assistance Relationships with customers It is seen that after the benefits from the company the customer seeks for assistance and complaints Redressal. After this the next highest load are of: Availability of Recharge coupons Network facility customers. The telecom industry is one of the booming industries of India and there is a huge scope for all the telecom companies in this sector. But due to increasing competition and rising literate customers it is mandatory for any company to take help of CRM in order to be competent in the market. Following are the suggestions for telecom companies related with CRM: Conclusion And of: Availability of Information Internet connectivity Suggestions The research studied the CRM tools used by telecom companies idea and Airtel. From the research we came to the conclusion that both Idea and Airtel have some strength and some weaknesses. We also go through various studies done on CRM in service sector and also on other related topics. The results and findings of this project can be used for further researches on this or related topics. This study is done using the sample size of 100 and it is done taking respondents of Indore city, so for working on the same project on higher scale this report can be used as a ground bases. It can also be referred by the researchers who want to do research on the topics related with CRM and service sector. Implications Different strategies of CRM have been implemented by different service sector companies. The importance of CRM has been realized by every company, as every company is looking forward to maintain a long term relationship with their In this study we come to know that for any business it is important to create customers and equally important to retain them with you. In a highly competitive market place, the company that has the best understanding of its customers will be able to respond more quickly to the changing circumstances. Customer Relationship Management aims at increasing Customer Value, Customer Interaction, Customer Participation and it also helps in Customizing Products. In service sector CRM plays a decisive role in the success of any business. It helps the company to differentiate their customers so that they can differentiate their offerings in order to develop a long term relationship with the customers which increases customer loyalty. After studying the role of CRM in the success of telecom companies, particularly in Idea and Airtel, we can conclude that the customers are served with top class services but the effective utilization of CRM strategies is not practiced by both the companies as CRM is the way of treating different customers differently but it is not found in either of the company. Although the customers of idea are satisfied with the company s CRM efforts but still it is found that the company can do better as far as effective utilization of CRM is concerned. BAUDDHIK VOLUME 4, NO.-3 SEPTEMBER- DECEMBER

9 References 1. Gronroos, Christian (1991). Relationship Approach to Marketing in Service Contexts: The Marketing and Organizational Behavior Interface, Journal of Business Research, vol 20: 1, p Morgan, Robert M., and Shelby D. Hunt (1994), The Commitment Trust Theory of Relationship Marketing, Journal of Marketing, 58 (July), p Sue, Patrick, and Paul Morin (2001), A Strategic Framework for CRM, at 4. Sheth, J.N. & Parvatiyar, A. (2002), Relationship marketing: Response books publications, New Delhi 5. Thompson, Bob (2003), What Is CRM? CustomerThink Guide to Real CRM, at 6. Raman, Pushkala, Wittmann Michael C., and Rauseo Nancy A.(2006) Leveraging Crm For Sales: The Role Of Organizational Capabilities In Successful Crm Implementation, Journal of Personal Selling & Sales Management, vol. XXVI,: 1 p Krasnikov Alexander, Jayachandran Satish, & Kumar V.(2009) The Impact of Customer Relationship Management Implementation on Cost and Profit Efficiencies: Evidence from the U.S.Commercial Banking Industry, Journal of Marketing Vol. 73, p Mohamed H.P. & Sagadeven A (2002.),Customer Relationship Management A Step-by-Step Approach, Vikas Publishing House Pvt. Ltd. 9. Shrivastava K.K. & Khandai S. (2002) Consumer Behavior in Indian Context,Galgotia Publishing Company, New Delhi tionship_management nship+management?cat_technology ctor.html =4688art_id= /casestudies14.shtml BAUDDHIK VOLUME 4, NO.-3 SEPTEMBER- DECEMBER