Reducing Customer churn for T-mobile Essay

Reducing Customer churn for T-mobile

Churn is the biggest problem that is faced by different mobile companies and in the telecommunication industry a churn is basically a CRM issue. It incorporates different aspects like customer acquisition, customer retention, cross selling/up-selling and maximizing the life time of the customers. The core objective of this plan is to reduce the customer turnover by 20,000 in one year and how to sustain them in the long run. In this paper a loyalty program is developed to fulfill the objective.

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Marketing Strategy

The marketing strategy of T-mobile must be crisp and it must be directed to the customers and it must focus on the objective as well as the target market. For this purpose the SWOT analysis of T-mobile is given below:

SWOT Analysis

1.                  Strengths

·                    T-mobile is one of largest mobile companies of the world and it’s the fourth largest mobile network in UK.

·                    Strong brand equity and brand recognition are the major strengths of T-mobile.

·                    The customer base is growing steadily in all the parts of the world.

·                    This organization is engaging in different alliances with leading corporations.

·                    The 3G network of T-mobile is quite established.

2.                  Weaknesses

·                    T-mobile has no presence in the emerging markets of the world.

·                    Customers are moving from one mobile service to another and brand loyalty is not present in the customers.

3.                  Opportunities

·                    The customer base is increasing and mobile shops are also increasing simultaneously.

·                     Organization can emphasize on the loyalty factor and through this strategy they can enhance their sales.

4.                  Threats

·                    The competition in the market is getting stiffer and new entrants are entering the mobile market.

·                    The worldwide economic slowdown.

Target Audiences

T-mobile has two target segments:

Pay monthly customers: The individuals that are included in this segment belong to an age bracket of 25-30 years old and they are located in the British cities of London, Edinburgh and Manchester. The customers that are targeted through this package are more concerned with the price, phone and plan. The ratio of the target market is distributed 50-50 for males and females. This segment can be further divided on the basis of psychographics in such a way that members of this group can be focused on the basis of price and a market penetration strategy can be adopted in this scenario.

Pay as you go customers: The individuals in this bracket are of 16-24 years old and they belong to large British cities. The essential characteristic of this class is that mobile is an essential constituent of their lives and they are more technology oriented. They are constantly looking for best offers and they change their service if a best price and effective service is offered to them.

Marketing Strategies

Different marketing strategies can be developed to increase the loyalty of the customers and reduce the churn of the customers. The marketing strategies that can be applied in this scenario are listed below:

Continuous engagement with T-mobile: Pay monthly customers can be targeted in such way that they are special to T-mobile and that is the reason why T-mobile is looking for a continuous engagement with them. Different packages can be offered in this scenario and it would range from offering gifts and free minutes to customers. Continuous engagement plans for exclusive T-mobile monthly customers are listed below:

–                     6 months contract = If you are entitled for a 6 months contract then T-mobile offers you 3 months free line rent and 100 free minutes.

–                     1 year contract = If you are entitled for an year contract then you can have 5 months of free line rent and 200 minutes and 500 sms and mms free.

–                     2 year contract = If you are entitled for a 2 year contract then you can have special features on your mobile phone and you can have 500 minutes free plus 6 months free line rent.

Application Development Software: Developing and launching services those are closely linked with the lifestyles or business processes of the customers can easily reduce the churn. Adding value in each and every application and giving the customer more than he wants can easily develop loyalty in the customers. Both PAYG and pay monthly customers can get a powerful sim card through which they have the freedom to develop their own applications and empower their mobile with attractive applications.

Ultimate standard of customer service: In the long run, churn can only be reduced because of the customer service and mobile companies that are close to the customers will win the race. If T-mobile would provide top notch service and maintains a healthy relationship with its customers and they are continuously in contact with the customers then they can reduce the churn.

T-loan: Customers would develop an understanding that the T-mobile values us, therefore T-loan can be offered to the customer if there balance during a call is finished and cant top up their phone at that very moment. In this scenario they can have a loan of maximum £10. This offer is specially designed for pay as you go customers. Through this offer their call cannot get disconnected and a beep would occur when their balance is finished and if they have subscribed for this service then they can acquire a loan and talk freely.

T-share: Customers have the freedom to share their topped amount with their friends and family members. In this way they can also enjoy free top ups if they share bigger amounts.

Referral programs: Network marketing can be a viable strategy in this scenario and they can have free minutes and free line rent if they refer 2 or more than 2 people. In this way T-mobile can enhance their customer base and they can also reduce the churn.

Communications Plan

A communications plan is an essential plan for every organization and especially for T-mobile it is very important because if an organization has decided to develop loyalty in customers then they would develop a viable communications plan.

Objective: The ultimate objective of the communications plan remain the same that is the communication would be simpler and concise and T-mobile wants to develop customers that are loyal in both the short and the long run.

Target audience: The target audiences for PAYG package are people from the age bracket 16- 24 years old. This target audience comprises of people who are fond to music, sports and they are more technology oriented. However, the pay monthly package contains individuals who are business oriented individuals and they are mainly professionals. They usually have expensive mobile phones and they are interested more in the connectivity and service of the mobile phones. The purpose of selecting this target market is that PAYG are more diverted towards text messages and they are more towards the top thing. However, the pay monthly packages are for the people who can afford bills. Therefore, target markets are divided on the above given reasons.

Product Information:

PAYG: The Sim card is powered with T-loan, T-share and other interesting attractive features. The services are less expensive and they are meant for youngsters.

Pay monthly package: The pay monthly package are meant mainly for professionals and business oriented individuals and the sim card contains business application software and users have the freedom to develop their own software and it depends upon compatibility of their mobile sets.

Media Plan: A media plan can be treated as an essential element in the communication plan (Sissors and Goodrich 2001). There are certain elements that are included in a media plan these elements are discussed below:

Advertising: Advertising is one of the most powerful mediums in today’s world and advertising can be done through different mediums like radio, newspaper, internet, television and etc.

Television- Both the target markets can be targeted but with different advertising campaigns one being more professional and the other being more funky and music oriented. However, both the campaigns must be followed after the ads of mobile phones and they must also be aired in the prime time.

Radio- Repetitive audio ads can be aired on this medium and ads for both the target markets can be aired through this medium and T-mobile can also shrink its expenses through this medium.

Internet- Advertising through famous websites and social networking groups can be a viable approach for pay as you go customers and they can be retained by offering different packages through this medium.

Flyers and Broachers- In order to target students and young adult’s flyers and broachers can be distributed after the school timings and in the universities.

Creative positioning and message

A positioning statement must be developed which would focus directly to the target market and develop a sense of loyalty in the customers (Ries & Trout, 2000). The positioning statement will be based on loyalty and it goes like this:

Develop applications, take loans, share your balance and many more but this comes only with a T-mobile Sim card.

T-mobile= innovative yet inexpensive

Response Management

The responses of the advertising can be calculated through primary research and the difference of previous sales and the sales after advertising. However, this should be calculated that how many customers are retained before the advertisements and creative positioning and how many are retained after that. In this way they can check the effectiveness.

Testing

Testing is the crucial factor of a media plan and through this phase T-mobile can check the validity of their plans to ensure the best possible results. T-mobile must check all the communication sources again and again.

Measurement

The results can be measured by seeking the responses of the customers and the first step is to implement the entire plan and once all the plans are implemented then through questionnaires and interview the loyalty of the brand can be checked. Similarly, T-mobile can also measure the results by finding out the change in buying behavior of these 15,000 customers.

Positioning and Creative Strategy

The positioning and creative strategy revolves around the communication strategy and it is closely linked with the well being of a brand (Trout 1997). The positioning and the creative strategy with an objective of developing loyal customers are given below:

Positioning of T-mobile to the target audience: T-mobile can be presented as an easy to use and user oriented mobile service and it incorporates features that are beneficial for the customers in both the short and the long run. The current objective of T-mobile is to maintain loyal customers for the brand. Therefore the entire brand of T-mobile is presented in 3 ways which are given below:

1)                 Quality oriented service: The ultimate focus for both the packages would be the service quality of T-mobile and both the packages would depict that T-mobile offers quality oriented service to its values customers yet the rates are lower than other organizations.

2)                 Total customer satisfaction: Through different advertising campaigns and packages T-mobile should target itself as an organization who believe in total customers satisfaction and who value their and that is the reason why they have initiated campaigns like T-loan, T-share which depicts that there is something for everyone.

3)                 User friendly services: The services of T-mobile are easy to use and they are user friendly, the brand is depicted in such a way that even a early school going child can use this service and even the grandfather would not face any difficulties with T-mobile.

Features and benefits relevant to the target audience: The features and benefits that are relevant to the target market are stated below:

PAYG: The customers belonging to this group would be offered gifts like I-pods, music systems, play stations, DVD’s etc. The conditions of offering these gifts are higher number of top-up and through lucky draws on a weekly basis customer receive their surprise gifts. Similarly, the something extra phenomenon is attached with every top up so the customers can realize that they are something special to the organization.

Pay for monthly package: The customers that belong to this package are usually more loyal and that is the reason why they can be offered different contracts that are on a long term basis. They can be offered free minutes and speedy internet service with every new contract they purchase. The pay for monthly package also incorporate special services like maps and navigator of the world and certain business applications would also be embedded in the sim card.

Furthermore both the target audiences are entitled for goodies and gifts through a referral program which would also enhance their loyalty towards T-mobile.

Creative samples for T-Mobile:  The creative samples for T-mobile would attract new customers and previous customers would be retained through this approach. The creative approaches are quite fruitful for a brand as they ensure growth if they are aligned with the overall strategy and it also helps the customers to understand the brand image. The creative approaches that are designed for T-mobile are discussed below:

Teasers

Advertising teasers are usually used to attract new customers and this strategy is widely used around the world. However, the strategy goes like this that once the customers gains the attention further strategies are developed to retain them. The advertising teaser strategies are especially for PAYG customers and they are attracted through newer campaigns. The teaser for T-mobile that is especially meant for PAYG customers might go on like this.

“Are you aware of the fact that what a ‘T’ can do……………”

The advertisement ends on this note and leaves the readers blank and curious what is coming next. The next advertisement would run after a few days which would back up this ad and in the next ad the benefits of T-mobile are presented in detail.

Endorsements

Although it’s an old strategy for retaining and attracting new customers but unconsciously customers are retained a lot through this strategy. When a T-mobile service is used by actors, actresses, sportsmen then customers develop a sense of self belief in the service and certain amounts of customers are retained by this strategy. Similarly, presenting a lavish look which depicts style and prestige is using the service can also be a viable idea because customers would relate their living styles with the ones that are presented in the ad and in most of the times they are retained by this strategy.

Database Strategy

As far as information storage in concerned databases are considered to be the places where information is stored for further usage and the decision making process usually initiate from a database.

The information that should be held on a database: The information can easily be collected through different researches and the best way is to conduct a primary research and questionnaires and surveys through different mediums can fill in the database. Currently, there are 15 million customers on the database and the organization is willing to retain 20,000 customers. In order to implement the loyalty program the information that is necessary is listed below:

1.                  The demographics of the customers: The demographics of the customers would include the name, age, occupation, sex and other related factors. Through demographic it becomes quite easier to figure out that who is your target market.

2.                  The behavior and attitude of the customers: Having in-depth knowledge about the customers would help a lot in enhancing the loyalty of the customers and through this information the customers can be retained on a long term basis. Knowing which brands they prefer, what is their spending nature, what are preferences as far as discounts and rebates are concerned. Through this knowledge it becomes quite easier for T-mobile to make decision and implement strategies.

How database would be used: The database can be used by the telemarketers and other concerned persons in the organization and they should contact the customers whom they think are appropriate based on the data that is stored in the database.

How the database would be maintained: The data at the first place should be collected through surveys and questionnaires and then it must be placed in a central database. Later this data can be utilized by the telemarketers. In the end the decision makers would develop their decisions on the basis of this database. Similarly, T-Mobile can also use different data management tools like data mining and fetching the data from different sources.

Budget

The budget of reaching 20,000 customers for the year 2009, 2010, 2012 is given below:

Certain assumptions are used in order to prepare the budget. The average spending by a customer having a pay for monthly package is estimated to be £20 and the average spending by a customer having a Pay as you go package is estimated to be £10. The objective of T-mobile is to have 20,000 loyal customers. Therefore, 5,000 customers are considered to be the part of pay for monthly package while the rest of them have chosen pay as you go.

Year 1

Pay for monthly package (5,000) customers: The annual sale for pay for monthly package is calculated as:

5000*20*12= £1,200,000

Pay as you go (15,000) customers: The annual sale for pay as you go package is calculated as:

15000*10*12= £1,800,000

Sales:

Pay for monthly package = £1,200,000

Pay as you go package = £1,800,000

Total sales = £ 3,000,000 (Year 1)

Variable Cost (The total budget that is allocated for the first year is £2 million)

Advertising Cost      £ 470,000

Promotional cost      £ 370,000

Variable salaries      £510,000

Other expenses        £650,000

Total Variable Cost = 2,000,000

Contribution Margin = Sales – Variable cost = £ 1,000,000

ROI = 1000000/2000000= 50%

Year 2

Pay for monthly package (5000) customers: The annual sale for pay for monthly package is calculated as:

5000*15*12= £900,000

Pay as you go (15000) customers: The annual sale for pay as you go package is calculated as:

15000*11*12= £1,980,000

Sales:

Pay for monthly package = £900,000

Pay as you go package = £1,980,000

Total sales = £ 2880000 (Year 2)

Variable Cost (The total budget that is allocated for the first year is £1.75 million)

Advertising Cost      £450,000

Promotional cost      £100,000

Variable salaries      £500,000

Other expenses        £600,000

Total Variable Cost = £1,650,000

Contribution Margin = Sales – Variable cost =£1,230,000

Year 3

Pay for monthly package (5,000) customers: The annual sale for pay for monthly package is calculated as:

5000*11*12= £660,000

Pay as you go (15000) customers: The annual sale for pay as you go package is calculated as:

15000*12*12= £2,160,000

Sales:

Pay for monthly package = £660,000

Pay as you go package = £2,160,000

Total sales = £ 2,820,000 (Year 3)

Variable Cost (The total budget that is allocated for the first year is £1.5 million)

Advertising Cost      £350,000

Promotional cost      £200,000

Variable salaries      £540,000

Other expenses        £600,000

Total Variable Cost = 1,690,000

Contribution Margin = Sales – Variable cost

                                    =£ 1,130,000

List of References

Ries, A. and Trout, J. (2000). Positioning: The Battle for Your Mind, 20th Anniversary Edition . McGraw-Hill.

Sissors, J. and Goodrich, W. (2001). Media Planning Workbook. McGraw-Hill Humanities/Social Sciences/Languages.

Trout, J. (1997). The New Positioning: The Latest on the World’s #1 Business Strategy . McGraw-Hill.

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