Mobile Telephone Service – Customer Gap Analysis
Indian mobile industry was started almost 10 years before, because of Govt. regulation it couldn’t grow like China. As per current estimation India’s mobile services market is expected to grow at 28.3% CAGR through 2009. But the market is also very much competitive, all the players are keen to increase the market share, so the prices are getting slashed. The current players in the market are –
o Reliance Infocomm
o Bharati Telecom (AirTel)
o BSNL
o Tata Teleservice
o Spice Telecom
o Hutchison / Orange
o BPL Telecom
The industry is moving from the Growth stage to the Shakeout stage, although the market is growing fast, but the Cut-throat Competition is slashing the profit margins, which is very common in Later Growth stage and players those who don’t have strong financial back up are going to be sold to the stronger players. So it’s very clear that players with stronger brand and financial back up will make the future profit.
The bigger players are also operating in other Telecom areas like – Landline, ISP, Broadband, Corporate data & voice services etc, to become one stop solution provider, hence forth increase the market share, this clearly indicates the Sorry situation for the smaller players. Entry barrier for any new player is too strong.
Once the Shakeout period is over in next few years the Mobile Industry in India is likely to enter in matured market.
But there is a other theory too – the economic growth in India, currently the market is growing more on the Network area growth, providers are moving to smaller cities from big cities, demand is generated from ‘B’ class & ‘C’ class cities – middle class population. A major section of middle class population of India in smaller cities couldn’t enjoy the advantages of Telecom service due to the Govt. monopoly, poor capacity, regulations; they are the immediate customers of the Mobile operators. The Landline is no more the preferable choice for the new Telco users; people like to use mobile phones because of its added advantages and easy subscription. Also the middle class size is expected to grow in India in next decades, so the Mobile market in India will be probably in Growth – Shakeout phase for a longer period.
Also the Roadmap, which was thought by the Govt. earlier has become more like a roadblock for the growth, to keep the market competitive they introduced lot regulations and zoning concepts, which have become barrier for market growth and to play at Economies of scale, which are likely to change by the market dynamics and market forces. So the Growth – Shakeout phase is likely to continue for a while. Few years before the number of players were many, as TRAI had stringent laws in number of zone operations by single provider, but these are changing rapidly.
o Service Providers Offerings
India is a vast and complex market. The Indian Department of Telecommunications classifies the country’s telecom markets into “metro” and “A”, “B” and “C” circles or zones, based on how many potential subscribers they have. For example, the C circles refer to rural areas and are the least attractive sectors with very little wealth. The 1999 National Telecom Act defined a phased telecom deregulation with national operator, VSNL, privatized in April 2002.
The cellular market is divided into 4 metro areas, 5 circle A areas, 8 circle B areas and 5 circle C areas. When all the cellular licensees become operational, India will be served by 77 networks. This segmentation of the market and licensees has certainly not helped the growth of the Indian market. These Network is increasing very fast, as companies want to tap the middle class population in smaller cities, and technological development, they are able to increase the Network boundary with lesser investment and also the competition.
Indian mobile operators offerings are segmented in two broad categories – Pre-paid and Post-paid. Although mobile market is growing positively, the Post-paid market is declining and Pre-paid market is increasing by leaps and bounds.
TRAI regulations and Indian consumer behavior are causing for the growth in Pre-paid market. As the revenue in pre-paid offer is increasing in Circle ‘A’ and Circle ‘B’ for Economies at scale, the Pre-paid market share is going to be the more important. When Reliance InfoComm came into the market, they didn’t realize this initially, but very soon they came with Pre-paid offer.
o Brief on Customer Service Gap Model
First analyze the Provider Gap
o Market Information Gap – Not knowing what Customers Expect: The Company’s incomplete or inaccurate knowledge of customers’ service expectations.
Key Factors –
o Inadequate marketing research orientation
o Lack of upward communication
o Insufficient relationship focus
o Inadequate service recovery
2. Service Standards Gap – Not having right standard and design: The Company’s failure to translate accurately customers’ service expectations into specifications or guidelines for employees.
Key Factors –
o Poor service design
o Absence of customer-defined standards
o Inappropriate physical evidence and Servicescape
3. Service Performance Gap – Delivery lag: Lack of appropriate internal support systems (e.g., recruitment, training, technology, compensation) that enable employees to deliver to service standards.
Key Factors –
o Deficiencies in HR policies
o Not match Supply & Demand capacity
o Customers failed to meet their roles
o Intermediaries problem
4. Internal Communication Gap – Promises don’t match: Inconsistencies between what customers are told the service will be like and the actual service performance [e.g., due to lack of internal communication between the service ‘promisers’ (such as salespeople) and service providers (such as after-sales service representatives)].
Key Factors –
o Lack of Integrated services marketing communication
o Ineffective management of Customer expectation
o Over promising
o Inadequate horizontal communication
Companies wishing to improve their service quality must diagnose the four organizational gaps and take appropriate corrective action to close them. An important message for managers from this overall implication is that a mere external focus (e.g., being customer-oriented and conducting periodic customer-satisfaction surveys) is not sufficient for delivering superior service. Managers must also systematically analyze and correct potential deficiencies within the organization.
Customer perceptions are subjective assessments of actual service experiences; customer expectations are the standards of, or reference points for, performance against which service experiences are compared. The sources of customer expectations consist of market-controlled factors, such as advertising, as well as factors that the marketer has limited ability to affect, such as innate personal needs. Ideally, expectations and perceptions are identical: customers perceive that they think they will and should. In practice, a customer gap typically exists. Good marketing strategies reduces this gap.
o Indian Consumers Behavior & Gap Model
This section is analyzed in following sub-sections –
o Consumer Perceptions –
What do you see?? Perception is the process of selecting, organizing and interpreting information inputs to produce meaning, i.e. we chose what info we pay attention to, organize it and interpret it. Information inputs are the sensations received through sight, taste, hearing, smell and touch. This is very important factor for Indian consumers, as the average literacy level is low in India. People want to judge the quality of service with more on Physical evidences comparing to western world, where people rely on the specifications.
As Mobile Telecom service is ‘Remote Service’, people don’t see any infrastructure of Network, consumers want to see the Front offices / people of the provider. This was realized by Reliance very quickly, they offered the Handset on Mail order basis which didn’t work out well, immediately they started opening retail store which brought lot of success for them, even entering late in the market. AirTel (Bharti), Hutch, Spice offer this presence through the dealer network and selective retail store. But provider direct presence is more valuable.
BSNL being the poor customer handler, they are still able to keep large market share because of their physical presence. But this concept is changing gradually amongst young generation.
Usually the Indian consumers see large gaps in Gap4, and they believe that Physical presence can only reduce this gap, Physical presence also helps provider to get feedback quickly and reduce Gap1.
o Learning & Communications – In India this process is comparatively slower than western world or developed countries. So the communication to the consumers play much bigger role than here, the need for mobile communication is much more in Rural India and cities, but the impediments are the cost and learning process. As the costs of mobile services are coming down, the opportunity in Rural India will grow. But the providers and operators have to communicate much more in teaching the people.
TSPs also need to encourage some retails network in Rural India, which can offer cheaper service, like HLL or P&G offers 1 Rs packet for their toiletries products, or ITC offers Internet centers in villages of several states. Tech. MNCs (AMD is releasing cheaper chips, Dell is coming up with low end PCs) are trying to come with tailored products for the emerging markets, which can be cheaper, less features, and easy to use.
Bharti planned to open a SMS based public booth Network in cities few years before, but that business plan became infeasible as SMS prices dropped like a falling rock. But potential for similar mobile public booth in Rural India is very high.
Learning & Communications are more required to close Gap 3 and Gap 4.
o Perceived risks –
In service risk assessed as it is consumed and experience, also ‘Word-of-Mouth’. People perceive more risk in service than products, because of its’ intangibility. In India this is more because of rudimentary legal framework, the Consumer protection is much less than developed country. This is one ‘Major Reason’ also for booming Pre-paid market than Post-paid. TSPs have to offer some kind of financial warranty in case of Post-paid connection. So far the experience of Indian consumers with Govt. Telecom organization is very poor.
Physical presence and financial back up required more to reduce the risk factors. The risk will be perceived less as Gap 3 and Gap 4 will be closing.
o Group Dynamics –
This is one of the most important factors in Indian market, here ‘Word-of-Mouth’ is much powerful than any other communication, and people follow their families, friends, and social groups. The Market communication from TSPs should keep this in mind.
The Call Plan should consider this with high importance, some mobile operators are considering this factor, but there is no still Customer analysis or segmentation done. Group dynamics consideration should be taken care in closing Gap 3.
Customer Service Quality analysis
Extensive qualitative and empirical research-spanning multiple phases, covering a variety of sectors, and involving a number of companies-suggests the following general insights about how customers assess service quality. Firstly, customer-defined service quality stems from a comparison of customers’ service expectations (i.e., their mental standards about what a company ought to provide by way of service) with their perceptions of the delivered service.
Secondly, customers evaluate the nature and extent of the gap between their perceptions and expectations along five broad service attributes (listed below in decreasing order of importance):
Reliability: Ability to perform the promised service dependably and accurately. This is more dependent on the Technology and Network Infrastructure is used, Indian TSPs are at per or near per with Global standards in this regard.
Responsiveness: Willingness to help customers and provide prompt service. – This one major are Indian Mobile operators are lagging and lot of work needed to be done.
Assurance: Knowledge and courtesy of employees and their ability to inspire trust and confidence. This is also another lagging area.
Empathy: Caring, individualized attention the firm provides its customers. This is also another lagging area.
Tangibles: Appearance of physical facilities, equipment, personnel, and communication materials. Mobile service is ‘Remote Service’; the Tangibility needs to be created other ways.
The Evidence of Service
Because Services are intangible, customers are searching for evidence of service in every interaction they make with the provider. Here is the general diagram –
People
– Contact Employees
– Customer him / herself
– Other customers
Process
– Operational flow of activities
– Steps in process
– Flexibility vs. Std.
– Technology vs. Human
Physical Evidence
– Tangible communication
– Servicescpe
– Promises
– Technology
– Internet integration
Service Quality Key Drivers –
o Employee (Call Agents) training
o Employee motivation
o Employee empowerment (This is highly lagging, still the managers take the decision, by that time customer loose patience and run away.)
o Retail outlets to ensure tangibility (has to be done more organized way, tie-up with Super market chains etc.)
o Measure service delivery / customer satisfaction
o Right BSS and CRM Solution
Need for CRM Solution –
With a CRM package sitting on the top of billing software, it can generate various kinds of data for the company to understand the service preferences, usage pattern and demographic nature of its customers. Previously it was a few discreet parameters. Now with a separate software package seamlessly integrated with the billing modules, the service providers can build relationships among different parameters to take important business decisions. A normal CRM package has around 12 odd modules from contact center management, campaign management, customer profiling to sales management. All these can help a mobile telecom company create an efficient sale and marketing and customer care operations. Using CRM as marketing and customer care tools, the telecom companies can differentiate their services for different strata of customers. For example profiling and segmentation of customers open up new marketing opportunities. With the help of a good CRM tool, a customer base can be divided into different segments and subsegments. Take the case of students as a group. Then one can have school and college students. Then the locality from where these students are coming. So segmentation can go on and on. It helps a mobile company to understand what a customer wants and the nature of services the company should deliver to prevent churning.
Segmentation is really important in Indian market as Demographics variation is very high here, so the System should be flexible enough to work with different process flows, different types of Service delivery, specially the very less focus made on Pre-paid market for customer satisfaction, where as pre-paid market stands for the larger share. Most of the operators consider pre-paid users as Anonymous, as they consider the ‘Exit Barrier’ is less in Pre-paid connection, where as the ‘Exit Barrier” is almost same as Post-paid, typically consumers consider the hassle of changing Mobile number and new SIM card cost as ‘Exit Barrier’.
Recommendations & Conclusion
Till today all the Mobile Operators are focused on Transactional Marketing (Get new customers) than Relationship Marketing (Retaining old customers). They are more focused on increasing Network area and circles – which is definitely require. And India has a huge market, which is fragmented in nature and too many customer segments – geography, income, age, language spoken, culture. Relationship Marketing is not much emphasized in India but the Industry, which is too competitive and can be operated remotely, this will be more important.
As the Industry will move towards mature stage (as happening in Developed countries), Relationship Marketing is more required and it needs to start now. The communication was pathetic till late 90s, but as it improves the Regional customers information sharing will increase.
Also the operators should come with new Business plans for Rural Areas, there is huge market in Mobile Data & Voice communication, there is huge potential but proper learning tool and communication required. As the Wireless Network cost is reducing, the focus in rural area will become important.
Final Recommendation List to Close Customer Gaps –
o Relationship Marketing focus
o Employee management
o Service focus on Pre-paid market
o New Business Ideas for Rural market
o Usage of right CRM tool
