Customer retention strategies in the South African mobile phone network industry

[摘要] English: Customer retention in business is important to increase market share and profits. To retain customers in a competitive business environment, a set of marketing mix strategies, comprising of product, process, price, people, promotion, place and physical evidence (commonly known as the 7Ps), are usually employed. This study investigated the influence of the individual marketing mix strategies on customer retention in the mobile phone network industry. Customer retention was determined by customers' subscriptions to a particular network who had no intention to switch to another network. Using self-administered questionnaires, data was collected from a sample of 479 respondents at three campuses representing two tertiary institutions (University of the Free State and two Maluti Technical and Vocational Education and Training (TVET) Colleges situated in the eastern Free State in South Africa). Cross tabulations, the Chi-Squared Test for Independence of Association, the Bivariate Chi-Squared Test and the Probit Model analysis were used to analyse the data.Cross tabulations provided information on the demographic statistics of respondents. A two-way classification Chi-Squared Test for Independence of Association showed that the observed differences in subscription between males and females for all the networks were not statistically different (p > 0.05), implying that network subscription and gender are independent of each other. However, network subscription and subscription preferences were significantly not independent of each other, with a strong bias towards prepaid subscription. In all the networks combined, 32.7% of the respondents were employed on part-time basis, with all the networks dominated by respondents in the R1-1500 income category. With the exception of Virgin Mobile where the dominant age category was 18-21 years, all the other mobile phone networks were consistently dominated by respondents in the 22-25 year age category.The study also showed that the marketing mix variables do not influence subscriptions or retention to an equal extent. Among the 7Ps, the Bivariate Chi-Squared analysis showed that retention of subscribers is significantly and positively influenced by product (p < 0.01), place (p < 0.05), people (p < 0.01), price (p < 0.01) and promotion (p < 0.01) in all networks, however process and physical evidence did not significantly encourage the use of networks by subscribers. As additional variables, satisfaction, corporate social responsibility and opinion leadership were also found to positively influence retention, with the former two being significant. The Probit Model analysis revealed that product and people significantly influenced the usage for Vodacom, with the former encouraging the usage and the latter the opposite. Product and process were the only two marketing mix variables found to positively and significantly influence retention in MTN (p < 0.01 and p < 0.1, respectively). For Cell C, only price was found to be highly significantly in positively influencing retention (p < 0.1). For Telkom Mobile (8ta) and Virgin Mobile, price, product and process significantly and positively influenced retention (p < 0.01, p < 0.1 and p < 0.1, respectively). Corporate social responsibility was found to significantly increase customer retention for Vodacom (p < 0.1) and Telkom-Virgin Mobile (p < 0.05). Satisfaction significantly increased customer retention in Vodacom (p < 0.01), MTN (p < 0.1) and Cell C (p < 0.01), but significantly reduced it in Telkom-Virgin Mobile (p < 0.01). Opinion leadership, on the other hand, increased retention of subscribers in all the networks, but was not significant (p > 0.05).On the basis of these findings and the competitive strategies recently employed by these mobile phone networks as detailed in media reports, recommendations ranging from mergers and increased product innovations to improved customer care, geographic market expansion, increased retail channels and lowered prices are made to ensure the survival of the networks in this highly competitive industry.

[发布机构] University of the Free State