Analysis of Customer Loyalty for Mobile Phone User in India

Management

India Mobile Phone market is the largest and one of the fastest growing markets in the world. It is characterized by a large subscriber base (752 million connections as on June 2013 expected to reach 987.9 million in 2015), low average revenue per user (INR 308 as on June 2012), and high churn rate (69.9% in 2012, and is expected to increase to 78.9% in 2015) (TRAI, 2012; KPMG, 2012; Gartner Report, 2012). Churn rates have escalated with increased competition and deregulation. Factors such as launching of mobile number portability scheme, introduction of 3G and 4G services and entry of new licenses are likely to further increase churn rates and reduce loyalty (TRAI, 2012). The high churn rates adversely affect mobile telecom operators because they stand to lose a great deal in price premium, decreasing profits levels and a possible loss of referrals from continuing service customers (Manero, 2011). In the context of such an intensifying competition in the telecom sector, there is renewed interest in customer retention, because obtaining new customer is costlier than serving the existing ones; therefore, it makes sense to retain the existing customers (Reichheld, 1996).

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