Developing retention strategies based on customer profitability in telecommunications: An empirical study
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Evangelos Xevelonakis is Managing Director of Swiss Valuenet. He graduated in economics and computer science and has a doctorate in customer relationship marketing from the University of Zurich. Dr Xevelonakis has headed several segmentation projects involving customer profitability and customer needs in the telecommunications and banking sectors. Before joining Swiss Valuenet he headed the Strategic Customer Relationship Management (CRM) Department of Swisscoms where he was responsible for customer segmentation, customer profitability and for the whole business intelligence process. He has also worked for Credit Suisse, where he was responsible for setting up the database marketing process for direct banking. His research interests involve predictive modelling for churn management, customer segmentation, customer profitability and designing concepts for strategic CRM. He also lecturers in CRM and data process modelling at the Zurich University of Applied Science.
Abstract Research evidence shows that telecommunications companies fail to make their CRM efforts pay off. This is probably due to a lack of capability to develop effective customer strategies based on customer profitability. Reducing the churn rate in the industry is not enough. Companies must be able to plan and execute profitable campaigns, taking into account both customer risk and customer profitability. Controlling and evaluating the campaign’s results is a crucial factor. In this paper, this deficiency is addressed by proposing a framework for building effective customer strategies based on customer behaviour, customer profitability and customer risk. Empirical results are analysed and discussed.
THE TELECOMMUNICATIONS MARKET The telecommunications sector is changing radically. The changes are driven by a combination of market, business and technological forces. There are many factors that influence the market:
Evangelos Xevelonakis Swiss Valuenet Seminarstrasse 99, Zurich 8057, Switzerland. Tel: ⫹41 7934 80560; Fax: ⫹41 44 361 5621; e-mail: xevelonakis@ swiss-valuenet.ch
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— The globalisation of the economy is forcing many multinationals to expand into new markets. These companies look for a single provider to meet all their telecoms needs. — Telecom operators looking for new revenue streams are entering the international market place.
Database Marketing & Customer Strategy Management
— New technologies — like wireless, digital subscriber line (DSL) and voice over internet protocol (VoIP) are enabling new service opportunities. The demand for bandwidth and high-speed access is growing, driving the development of new services such as wireless broadband and DSL. — Customer awareness and knowledge is increasing. Customers want services that satisfy their unique needs and demand reliable service delivery at competitive prices. Information must be easily accessed, anytime, anywhere and anyhow. One stop shopping must be possible
Vol. 12, 3, 226–242
Henry Stewart Publications 1741–2447 (2005)
Developing retention strategies based on custom
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