IDENTIFICATION AND ANALYSIS OF KEY DETERMINANTS(FACTORS)

Abstract

Many countries in the world have witnessed, over the last few decades, a dramatic change in the importance of services and the role of service sector organizations. The growth of service sector is a global trend. There are two main reasons for the growth of service sector. Firstly: growth in intermediate demand from firms and secondly: growth in final demand from customers. Telecommunications constitutes one of the key components of services sector all over the world. An efficient, good quality and competitive telecommunication market contributes greatly to the economic growth of any country. Telecommunication is one of the flourishing business the world has experienced in this modern times. It plays an important role in the world’s economy and the worldwide telecommunication industry's revenue was estimated to be $3.85 trillion in 2008. The service revenue of the global telecommunications industry was estimated to be $1.7 trillion in 2008, and is expected to touch $2.7 trillion by 2013. The convergence of voice and data transmission, commoditization of equipment, deregulation and heightened customer demand for more value were forcing telecom companies to rethink how they did business. For such a huge market, strategist world over are working day and night to device strategies for gaining the share in the market. However, on the other hand there are certain problems they are facing with. Customer Churn / leftover is the biggest problem for them. To combat the customer churning issues, firms are now aiming to devise proper customer retention strategies as it has been identified unanimously that the "...cost of retaining an existing customer is far less than acquiring a new one". The service sector of the economy of Pakistan too has undergone deep-rooted changes in terms of its structural composition, contribution to the gross domestic product (GDP) and employment over the past three decades. Within the service sector, the telecommunications sector has grown particularly quickly since 1996, being one of the fastest growing sub-sectors, despite of the sectoral interdependencies of the economy. Despite slow economy progress, the telecom sector of Pakistan continued to grow positively in terms of subscription, revenue and teledensity. Among other telecom service providers in Pakistan, PTCL, previously government owned telecom incumbent, has a huge share in the telecom market in terms of subscription, revenue and teledensity especially the fixed line teledensity. The de-regulation policy in Telecommunication adopted by Pakistani government as per WTO agreement broke the PTCL monopoly / hold over the telecom market and services. New cellular v Identification and Analysis of Key Determinants (Factors) Causing Customer Churn (Turn Over) among PTCL’s Domestic Customers and Development of Measures as a Framework for their Retention companies that have entered into the Pakistan’s Telecom market after the telecom deregulation policy are giving tough competition to the PTCL. Though this increase in customer base of the cellular operators is very healthy but on the other hand the customer base of the PTCL is decreasing day by day even though there is no any other major competitor in the fixed line telephony in the country. PTCL is continuing to lose its fixed customers since 2005, as there are about 5,190,899 fixed customers in 2005 which reduced to 3,268,642 in 2010 and still decreasing at a much faster pace. Also the wireless services of the PTCL don’t seem to have much acceptance in public as its growth rate is not much encouraging. Over the years, the customer base of PTCL is deteriorating and if proper remedial measurement are not taken, soon a time will come when nobody want to use its services. The loss of PTCL is not just a loss of one company, but since government still has more than 70% shares in it, so it is also a huge loss to the government and the general public also. The purpose of this paper is to determine the main factors / symptoms that are causing Customer Churn in PTCL and then to propose detailed customer retention framework, so that company can take measures to prevent the attrition from happening in the future. At the end of this thesis report, recommendations will also be presented to PTCL and the other authoritative agencies like PTA. This study will also determine whether the continuous churning of the customers from the PTCL is an international trend only or some other factors are also involved in it. After knowing the reasons of customer churn and by adopting proper preventive measures and customer retention policies, customer attrition could be better managed to stem the significant revenue loss from defecting customers. This study develops a clear understanding of the true churn drivers in PTCL and presents the organizational challenges that must be overcome to eliminate the root causes of churn and thereby increase profitability. This study shall leads to development of preventive measures as a framework for their retention.