Building Customer Loyalty through Value Added Services

Book excerpt: Doctoral Thesis / Dissertation from the year 2011 in the subject Business economics - Offline Marketing and Online Marketing, , course: Management/Business Studies, language: English, abstract: The Indian cellular services market is growing at a rapid pace and the competition has also increased many folds. It has become imperative for the service providers to adopt such technologies and strategies which ensure their success in such a dynamic situation. As a result, the service providers are trying to develop an understanding about the customers in terms of enriching their experience by providing quality services resulting into a higher satisfaction and ultimately loyalty. With constantly decreasing Average Revenue Per User (ARPU) per month in a low tariff regime, the cellular operators in India are looking towards value added offerings for their customers in order to increase their ARPUs and survive in the coming tough times as they are unable to rely solely on the conventional voice services. The fact that the majority of cell-phone users are prepaid customers indicates towards a tendency for higher customer churn rate and thin profit margins to the mobile service providers despite a phenomenal increase in subscriber base. However, the situation has further been complicated with the instigation of mobile number portability, as it is going to enhance the customer churn rate due to the intense competition being faced by the operators in this market on the one hand and on the other very demanding customers. In such a scenario, the challenge for Indian cellular operators is to understand the preferences of their customers better and then to successfully offer the services that foster greater customer retention, as the entry of new global players in telecom market has further resulted in mounting customer acquisition and retention costs. Thus, all these facts highlight the relevance of value added services in an ever growing telecom market as a key strategic tool, not only for differentiation of services but also as a factor responsible for developing satisfaction and loyalty among the customers. Therefore, the present research study attempts to study the effects of Value Added Services (VAS) on Service Quality vis-à-vis Customer Satisfaction and Customer Loyalty in wireless telecommunication market. The findings of the present study convey that the service providers must concentrate their efforts not only on improving the core services but also the quality of Value Added Service (VAS) offered, as they have a potential to act as a strategic tool in order to enhance the customers’ satisfaction which will ultimately result in higher customer loyalty.